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E-commerce sales in the first quarter soared 12.4% from a year ago to $127.3 billion (not seasonally adjusted), the Commerce Department reported on Friday. Last year, e-commerce sales blew through the $500-billion level for the first time ($513.6 billion). For 2019, e-commerce is on track to hit $575 billion, an increase of $61 billion. Over the past five years, e-commerce sales have doubled. On a seasonally adjusted basis, e-commerce sales in Q1 hit an all-time high of $137.7 billion. E-commerce includes sales by the online operations of brick-and-mortar retailers. The top ones have huge and thriving online operations: Walmart, Home Depot, BestBuy, and Macy’s in that order are the fourth through seventh largest e-commerce sites in the US, behind Amazon, eBay, and Apple. So this is the business Macy’s brick-and-mortar stores are in:

But none of the major retailers, with one exception, disclose just how much of their own booming e-commerce sales have eaten into their brick-and-mortar sales. Macy’s, for example, just reported a decline in net sales in Q1 compared to a year ago, but “double-digit growth in our digital business” – the only thing Macy’s said about its e-commerce sales. With overall revenues declining and e-commerce sales booming, its brick-and-mortar operations must have been beset by plunging sales. But Macy’s keeps this data secret.

[..] People say that e-commerce accounts for only a small portion of total retail sales (10.2% in Q1) and therefore doesn’t matter. But this is misleading because e-commerce has not yet made major inroads into sales at gasoline stations, auto dealers, and grocery and beverage stores that together account for 52% of all brick-and-mortar sales. With those taken out of the tally, e-commerce now amounts to 23.6% of the remaining 48% of retail sales.

So yes, e-commerce is only 10.2% of total retail sales. But it has already killed entire retailer categories, such as video stores, and is killing others while it is leaving other retailer categories essentially unscathed, such as gas stations, auto dealers, and grocery stores – though that may change in the future.

Democrats had called for Mueller to appear before them on Wednesday. Mueller did not show, despite Barr showing a willingness to have him testify. Instead, the committee called for a hearing with constitutional experts to discuss the executive privilege claims raised by the White House. I was one of those experts, and the hearing did not exactly turn out as the Democrats planned. They have insisted that President Trump had already waived privilege to undisclosed evidence shown to Mueller. The committee witnesses, however, agreed that there is no such waiver. Worse, the witnesses agreed that Barr could not release the “full and unredacted report” to Congress including any grand jury, or Rule 6(e), evidence. That is in direct contradiction to weeks of demands for the unredacted report along with a subpoena that demanded disclosure of the entire report.

The committee maintained that “neither Rule 6(e) nor any applicable privilege barred disclosure of these materials to Congress.” Yet, the expert witnesses it called on have now testified that is not true. As I noted to the committee, the subpoena, which is the very basis for the earlier contempt vote, was demanding an unlawful act from Barr, and the committee then held him in contempt for not committing that unlawful act. The key to setting up someone for contempt of Congress is to draft a subpoena that he might actually be able to legally fulfill. Notably, despite all of the punditry and cable news coverage of it, the contempt citation has not yet been submitted to the full House for a vote, let alone to a court for review. That is probably not because the contempt case is too strong.

[..] One reason for the waning audience is that Democrats are stepping on their own lines. The week that their witnesses were contradicting the position of the House Judiciary Committee and the staff was marketing Mueller CDs, Democrats held a closed door party caucus. In it, House Speaker Nancy Pelosi reportedly told Democratic members she has no intention of moving on impeachment. Imitating disgruntled Democratic voters, Pelosi said, “Some of our folks are a little bit ‘Why are we not impeaching the president?” She then added, “They get a little down.”

Guy Verhofstadt, Brexit co-ordinator for the European Parliament: “What links Strache, Le Pen, Salvini & Farage? They are all far-right, they all do Russia’s bidding & they all want to destroy the EU. They say they are patriots, I say they are traitors to traditional European values & freedoms.”

Collusion all over again. Blame someone else, never yourself.

The right has no choice but to unite, the EU parliament contains blocks of parties from at least 7 nations that are required to get seats. But what do these people really agree on?

Nationalist parties from across Europe held a rally on Saturday in Milan promising to reshape the continent through next week’s EU parliamentary election. Headlining the event was Italian Deputy Prime Minister Matteo Salvini and Marine Le Pen of France’s National Rally (RN). The two populists are eager for their Europe of Nations and Freedom (ENF) group to become the third largest party in Brussels. “There are no extremists, racists or fascists in this square,” Salvini said. “Here you won’t find the far-right, but the politics of good sense. The extremists are those who have governed Europe for the past 20 years.” Thousands of flag-waving supporters of Salvini’s League party packed a rain-soaked central Milan square to see far-right and anti-immigrant leaders from 11 European Union countries present a common front in their battle to pull back power from Brussels.

“This is a historic moment,” said RN leader Marine Le Pen, “we say no to this immigration which has submerged our nations, putting our people at risk,” she said, playing up an issue that has helped fuel support for nationalist groups. Hundreds of opponents gathered on the sidelines, their boos, jeers and whistles sometimes drowning out the speakers. “Fascists leave Milan,” they chanted as Salvini took the stage. The ENF also includes Austria’s Freedom Party, Belgium’s Vlaams Belang and the Netherlands’ Party for Freedom, whose head Geert Wilders was present in Milan. But despite their shared dislike of immigration and the EU, Europe’s populists remain divided on many key issues on the continent, including budgetary discipline, migrant distribution and relations with Moscow.

Nigel Farage is facing an investigation by European parliament authorities over claims that he failed to declare nearly half a million pounds in gifts from an insurance tycoon under investigation by the National Crime Agency. It was claimed this week that the Brexit Party leader has been given as much as £450,000 in kind by Arron Banks, including a chauffeur-driven car, rent and bills on a £4.4m Chelsea home, and lavish trips to the United States to meet with right-wing politicians. But none of the gifts, detailed in invoices seen by Channel 4 News, were declared on Mr Farage’s register of interests with the European parliament, which is designed to prevent MEPs from keeping their conflicts of interests secret. In a letter seen by The Independent, one of the European parliament’s quaestors – MEPs responsible for the body’s financial and administrative matters – calls on the parliament’s presidency to “investigate these apparent contraventions as a matter of urgency”.

The push for an inquiry comes days before British voters are set to go to the polls for the European parliament elections, with Mr Farage’s Brexit Party thought to be heading for a runaway victory with an anti-EU, anti-establishment message. “As you will be aware, the code of conduct for members of the European parliament with respect to financial interests and conflicts of interest, in particular Article 6(1) of the implementing measures, makes it clear that members shall disclose their attendance at events organised by third parties where the reimbursement of their travel, accommodation or subsistence expenses, or the direct payments of such expenses, is covered by a third party,” Catherine Bearder, the quaestor who is also a Liberal Democrat MEP, said in the letter to Antonio Tajani, president of the European parliament.

“I can see no reference to any of the reported travel or accommodation subsidies related to Mr Farage’s US tour on any of his declarations of financial interests on the parliament’s website.” She noted that Mr Banks was “currently under investigation by the National Crime Agency over the source of his funding for the Brexit campaign”. [..] Under European parliament rules, Mr Farage could be fined up to around €10,000 (£8,800) through withholding of his subsistence allowance if he is found to have broken the rules. [..] Last year, in a separate run-in with expenses rules, Mr Farage had his MEP salary docked by more than £35,000 to recoup misspent EU funds intended for the staffing of his office.

Electing Boris Johnson leader on a no-deal Brexit ticket would risk a permanent split in the Conservative Party, a former minister has warned. The former foreign secretary has established himself as firm favourite to succeed Theresa May as prime minister in a contest many in Westminster expect to be triggered within weeks. It comes as the prime minister prepares to deliver a speech on Brexit this week, in what a government source billed as a “bold offer” to MPs in a last-ditch attempt to build support for her beleaguered Brexit bill in the Commons. A poll conducted shortly after he confirmed he would stand on Thursday put him on 39 per cent support among party members, well ahead of his nearest rival Dominic Raab on 13 per cent.

But he must first win his way through an MPs’ vote onto the shortlist of two presented to the membership in the country. Foreign secretary Jeremy Hunt is currently thought to be leading in the race to sign up MP supporters, with Mr Johnson, Mr Raab and Michael Gove grouped together some way behind, and a wide range of other potential candidates yet to make real inroads. But Phillip Lee, who quit Ms May’s government last year over her EU withdrawal policy, told The Independent that Mr Johnson would risk the Conservatives’ hold on power and the future of the party if he took it down a no-deal route.

It would be a “sweet irony” if the Brexit figurehead found himself forced to deliver a Final Say referendum because there was no majority in parliament for no deal, he said. “I don’t think it is necessarily a personality who splits the party, I think the policy might,” said Mr Lee, who now chairs the Right to Vote group of Tory advocates of a referendum. “I don’t think a no-deal Brexit leaves the party intact. If that becomes the policy of the winning candidate, expect interesting times to follow.”

Senior Labour figures were engaged in a desperate battle to shore up the party’s support on Saturday night, amid warnings that its stance on Brexit was helping to “detoxify the Lib Dems”. With just days left before the European elections at which Nigel Farage’s Brexit party is expected to triumph, shadow cabinet ministers are among those concerned that Labour’s ambiguous position on Brexit has helped revive the Lib Dems. It comes as new polling seen by the Observer suggests Vince Cable’s party is running in first place in London and could even beat Labour overall.

One senior party figure warned: “If the consequence of Labour’s Brexit position and this European election is to essentially detoxify the Lib Dems, then that’s a real problem.” Clive Lewis, a shadow Treasury minister, said “lifelong Labour voters” would not back the party this week due to its Brexit stance. He added: “It feels like we’ve given [the Lib Dems] the political equivalent of resuscitation.”

The fears came as it emerged that: • London mayor Sadiq Khan has pledged that he will campaign for Remain “day and night” in any second referendum, as he urged voters, in an article for the Observer, to back Labour to stop a Farage victory. • Theresa May is planning to make one last “bold offer” to MPs in a desperate attempt to secure support for her Brexit deal, including changes demanded by Labour, Democratic Unionist and Tory MPs and a new round of indicative votes. • Labour MPs revealed they were already drawing up attempts to stop a no-deal Brexit should a hardline Brexiter replace May as prime minister, with some suggesting that revoking Brexit had to be a fall-back option.

An Opinium poll for the Observer found that the Liberal Democrats have narrowly overtaken Labour as the favourite party of remain voters, with 29% of the group now backing Cable’s party and 28% backing Labour.

Boeing acknowledged Saturday it had to correct flaws in its 737 MAX flight simulator software used to train pilots, after two deadly crashes involving the aircraft that killed 346 people. “Boeing has made corrections to the 737 MAX simulator software and has provided additional information to device operators to ensure that the simulator experience is representative across different flight conditions,” it said in a statement. The company did not indicate when it first became aware of the problem, and whether it informed regulators. Its statement marked the first time Boeing acknowledged there was a design flaw in software linked to the 737 MAX, whose MCAS anti-stall software has been blamed in large part for the Ethiopian Airlines tragedy.

According to Boeing, the flight simulator software was incapable of reproducing certain flight conditions similar to those at the time of the Ethiopian Airlines crash in March or the Lion Air crash in October. The company said the latest “changes will improve the simulation of force loads on the manual trim wheel,” a rarely used manual wheel to control the plane’s angle. “Boeing is working closely with the device manufacturers and regulators on these changes and improvements, and to ensure that customer training is not disrupted,” it added. Southwest Airlines, a major 737 MAX customer with 34 of the aircraft in its fleet, told AFP it expected to receive the first simulator “late this year.”

American Airlines, which has 24 of the aircraft, said it had ordered a 737 MAX simulator that will be delivered and put into operation in December. Only Air Canada has a MAX simulator, industry sources told AFP. Currently, there is only one flight simulator specific to the 737 MAX in the United States, and it is owned by Boeing, according to FAA documentation. US airlines train their pilots flying the MAX on a simulator built for the 737 NG, the version preceding the 737 MAX in the 737 aircraft family. [..] US airlines have targeted August as the date they expect to resume flying on the 737 MAX.

“Yellow vest” protesters turned out across France Saturday to mark six months of rallies against President Emmanuel Macron’s policies, but with their numbers dwindling, according to a government tally. A day after Macron appeared to draw a line under the movement, yellow jacket activists – named after the fluorescent vests they wear – marched in Paris and several other cities for the 27th consecutive week. The count from the interior ministry – routinely dismissed by yellow jackets – put the numbers across France at 15,500, of whom 1,600 marched in Paris. That was down again from last week’s count of 18,600, suggesting a steady decline. The yellow jackets’ own tally put the nationwide total at 41,000.

The numbers were nevertheless certainly down from the massive turn-out at the beginning of the movement, when nearly 300,000 people protested across the country on November 17 in what became one of the biggest challenges to Macron’s government. But many of those who turned out on Saturday were determined to keep going. “When I hear Macron say that he has done his bit, I can’t agree, and that motivates me even more,” said Virginie, an executive secretary marching in the southern city of Montpellier. On Friday, Macron said he felt he had answered the questions raised by the movement and that there was no more to be done politically. Those who had other ideas about how the country should be governed should run for office themselves, he said. “But democracy is not played out on Saturday afternoons,” he added.

China’s housing regulator has urged four more cities to prevent their residential property markets from overheating in the latest sign that authorities are not about to relax their grip on the real estate business in order to spur the economy. The cities of Suzhou, Foshan, Dalian and Nanning have been told by the Ministry of Housing and Urban-Rural Development to stabilize land and housing prices as well as market expectations, the official Xinhua news agency reported late on Saturday. Six other cities were warned by the ministry last month to monitor the growth of home prices in their markets, after some cities, including, Foshan quietly started to relax some curbs since December to spur demand.

China’s home property market is a key plank of the economy, influencing tens of related sectors such as construction and financial services. The sector has held up well despite a slowdown in growth in the world’s second-biggest economy, with policymakers walking a fine line between preserving stability and hurting market sentiment. Renewed tensions between China and the United States over trade have also added pressure on Chinese policymakers to keep the domestic economy on a stable footing, while continuing to fend off risks such as housing bubbles. Average new home prices in China’s 70 major cities rose 0.6% in April, unchanged from the pace of growth in March, according to a monthly official survey.

According to neuroscientist Matthew Walker, I’m doing serious damage to my health—and life—by not sleeping enough. “The decimation of sleep throughout industrialized nations is having a catastrophic impact on our health, our wellness, even the safety and education of our children. It’s a silent sleep loss epidemic. It’s fast becoming one of the greatest challenges we face in the 21st century,” Walker, an expert in sleep at UC Berkeley and author of the best-selling book Why We Sleep, told a rapt TED audience on Thursday.

[..] He ran down all the ways in which sleep deprivation hurts people: it makes you dumber, more forgetful, unable to learn new things, more vulnerable to dementia, more likely to die of a heart attack, less able to fend off sickness with a strong immune system, more likely to get cancer, and it makes your body literally hurt more. Lack of sleep distorts your genes, and increases your risk of death generally, he said. It disrupts the creation of sex hormones like estrogen and testosterone, and leads to premature aging. Apparently, men who only sleep five hours a night have markedly smaller testicles than men who sleep more than seven.

“Sleep loss will leak down into every nook and cranny of your physiology,” he said. “Sleep, unfortunately, is not an optional lifestyle luxury. Sleep is a nonnegotiable biological necessity. It is your life support system.” [..] Everyone is obsessed with sleep. And they know they’re not getting enough—hence the growing demand for sleeping pills, the emergence of sleep tracking devices (Walker wears an Oura Ring to track his), smart beds, Alexa integrations to put you to sleep, and mindfulness sleep apps. Arianna Huffington famously left journalism to found a company devoted to sleep and wellness.

Missing more than one paycheck is a one-way ticket to financial hardship for nearly half of the country’s workforce. A new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck. [Research from the Federal Reserve found that 4 in 10 Americans couldn’t afford a $400 emergency, and 22% say they expect to forgo payments on some of their bills.]

Certain communities were more prone to economic hardship in the event of missing a paycheck. Roughly two-thirds of households earning less than $30,000 annually and Hispanic households would be unable to cover basic living expenses after missing more than one paycheck, the researchers found. “Even so, notable differences remain across race, ethnicity, education groups, and locations and many individuals still struggle to repay college loans, handle small emergency expenses, and manage retirement savings,” it added. The findings were based on a survey of more than 1,000 adults. The researchers interviewed a nationally representative panel designed to be indicative of the U.S. population.

Art and collectibles prices have exploded in the past decade as a result of the extremely frothy conditions created by central banks. Hardly a week goes by without news headlines being made about ugly, tacky, or just plain bizarre works of art fetching tens of millions, if not hundreds of millions, of dollars at auction houses like Sotheby’s and Christie’s (often sold to rich buyers in China or Hong Kong). Make no mistake: we’re currently experiencing a massive art bubble of the likes not seen since the Japan-driven art bubble of the late-1980s that ended disastrously. Two art market records were made in the past week: the $91.1 million “Rabbit” sculpture by Jeff Koons, which set the record for the highest amount paid for a piece of art by a living artist, and the sale of Monet’s ‘Meules’ painting for $110.7 million, which set a record for an Impressionist work.

[..] In order to understand today’s art bubble, it is helpful to learn about the art bubble of the late-1980s that ultimately crashed and burned. Throughout the 1980s, Japan had a bubble economy that was driven by debt and bubbles in property and stocks. Japan’s economy was seemingly unstoppable – almost everyone in the West was terrified that Japan’s economy and corporations would trounce ours while destroying our standard of living in the process. Of course, few people knew how unsustainable Japan’s economy was at that time.

As a result of hubris and the enormous amount of liquidity that was flowing throughout Japan’s economy in the late-1980s, Japanese businesspeople and corporations started to speculate in art, often bidding previously unheard of sums that Western art collectors would never have dreamed of paying. For example, Yasuda Fire and Marine Insurance paid a record $39.9 million for Vincent van Gogh’s “Sunflowers” at a London auction in 1987. Ryoei “wild fellow” Saito, Chairman of the Daishowa Paper Manufacturing empire, paid $160 million for the world’s two most expensive paintings – a Van Gogh and a Renoir. At the peak of the art market in 1990, Japan imported more than $4 billion worth of art, including nearly half of all Impressionist art that was on the market. Of course, the art market plunged along with Japan’s bubble economy in the early-1990s.

The eurozone country that has become synonymous with insolvency is today proving to be a treasure-trove for some. Traders who bought Greek assets a few years ago have good reason to celebrate, having banked returns that no other market could have provided. But, as is often the case, an opportunity that seems too good to be true probably is. And this one could portend the next phase of our global crisis. An investor who bought German government bonds in 2013 has, by now, gained a 7% return, whereas a buyer of a Greek government bond issued at the height of the country’s debt crisis in 2012 would have earned a colossal 231% return. Two months ago, the price of the first ten-year bond issued since Greece’s bailout in 2010 surged for seven consecutive days, rising by 2.8% in a week – a better performance than any other government bond issue worldwide.

That bond rally created a psychological slipstream, which, in recent months, pulled the Athens Stock Exchange 26% higher, against the background of a European asset market inexorably bleeding capital. On the strength of these impressive numbers, it is as tempting as it would be false to herald the end of Greece’s crisis. The Greek bond and equity rally is obscuring a growing chasm between a gloomy economic reality and an unsustainably buoyant financial climate. Rather than reflecting Greece’s recovery, the traders’ high profit margins mirror continued deflationary pressures and fragmentation in Europe within a global environment of decreasing debt sustainability. The numbers from Greece, so exciting to investors far and wide, may well prove a harbinger of fresh troubles for Europe’s economy, and perhaps for the world.

Given the gaping gap between Greece’s nominal national income and its public debt, how is it possible that Greek bonds are soaring? Why is the Athens Stock Exchange rising while business remains hampered by punitive taxation, banks labor under a mountain of non-performing loans, declining unemployment reflects only emigration and some precarious jobs, net public investment is negative, and private investment in production of high value-added tradable goods is absent?

One reason is the proverbial dead-cat-bounce. Given how thin Greece’s equity market is – total capitalization is €52 billion ($58 billion) – the modest influx of capital that came in the wake of the bond rally was enough to drive the 26% rise in its index. But, despite this surge, the Greek market remains 81% below its 2009 level. As for the bond rally itself, the paradox quickly disappears once we recall how the first two bailouts shifted Greek public debt from the private sector to the shoulders of Europe’s taxpayers.

I’m very happy I’m not the only one having signaled this for 2+ years. It’s almost worth being called a Trump supporter for. Though that is still an utterly ridiculous allegation in my case. But this is the most dangerous tendency in American society today, not Trump.

The mainstream media in the United States has made a shift in the past few decades. Now, they appeal to emotions as opposed to reporting the facts. This “cultural schizophrenia” is tearing the U.S. apart at the seams. Based on the conclusions to a RAND Corporation study, the mainstream media is actively sowing discord in American society, award-winning journalist Chris Hedges tells RT. The media is focusing on making two sides hate each other instead of reporting on the facts, and the majority of the public is unaware and doesn’t care that their minds are being manipulated by their own emotional responses.

The study, which was released by RAND earlier this week, states that between 1987 and 2017, news content has shifted from event- and context-based reporting to coverage that is “more subjective, relies more heavily on argumentation and advocacy, and includes more emotional appeals.” According to RT, prime-time cable news shows and online journalism lead the way in this shift to emotional and hate-based rhetoric. It has been noticed in print journalism as well, the government-funded think tank concluded. This is contributing to what RAND termed “Truth Decay.” This is described as a shift away from facts and analysis in public discourse.

Hedges claims that the deterioration of the mainstream media is “far worse” than the RAND report suggests. And he isn’t alone in that assessment. [American journalist Matt]Taibbi says that the result of this journalistic decay and emotional fear mongering is a public addicted to hating each other. Americans have become addicted to the news that agrees with their bias, and it was set up that way on purpose. The only thing anyone will hear when they turn on the news are stories specifically crafted to manufacture outrage, make you hate the other side, and fuel the addiction to anger. –SHTFPlan

[..] It is becoming difficult to tell apart facts and opinion now, and people believe whatever they want to believe, Hedges explained. “We spent years watching CNN and MSNBC promoting this conspiracy theory that Trump was a Kremlin agent… It was all garbage but it attracted viewers,” Hedges added as an example. And, if you don’t mind your IQ dropping, turn on MSNBC for just a few minutes. It’s likely you’ll still hear something about Russiagate to keep the public pissed off beyond comprehension.

[..] a few days ago the Working Group on Syria, Propaganda and Media (WGSPM) published a document signed by a man named Ian Henderson, whose name is seen listed in expert leadership positions on OPCW documents from as far back as 1998 and as recently as 2018. It’s unknown who leaked the document and what other media organizations they may have tried to send it to. The report picks apart the extremely shaky physics and narratives of the official OPCW analysis on the gas cylinders allegedly dropped from Syrian government aircraft in the Douma attack, and concludes that “The dimensions, characteristics and appearance of the cylinders, and the surrounding scene of the incidents, were inconsistent with what would have been expected in the case of either cylinder being delivered from an aircraft,” saying instead that manual placement of the cylinders in the locations investigators found them in is “the only plausible explanation for observations at the scene.”

[..] the kindest possible interpretation of these revelations is that an expert who has worked with the OPCW for decades gave an engineering assessment which directly contradicted the official findings of the OPCW on Douma, but OPCW officials didn’t find his assessment convincing for whatever reason and hid every trace of it from public view. That’s the least sinister possibility: that a sharp dissent from a distinguished expert within the OPCW’s own investigation was completely hidden from the public because the people calling the shots at the OPCW didn’t want to confuse us with a perspective they didn’t find credible.

This most charitable interpretation possible is damningly unacceptable by itself, because the public should obviously be kept informed of any possible evidence which may contradict the reasons they were fed to justify an act of war by powerful governments. And there are many far less charitable interpretations. It is not in the slightest bit unreasonable to speculate that the ostensibly independent OPCW in fact serves the interests of the US-centralized power alliance, and that it suppressed the Henderson report because it pokes holes in the narratives that are used to demonize a longtime target for imperialist regime change. That is a perfectly reasonable possibility for us to wonder about, and the onus is now on the OPCW to prove to us that it is not the case.

Either way, the fact that the OPCW kept Henderson’s findings from receiving not a whisper of attention severely undermines the organization’s credibility, not just with regard to Douma but with regard to everything, including the establishment Syria narrative as a whole and the Skripal case in the UK. Everything the OPCW has ever concluded about alleged chemical usage around the world is now subject to very legitimate skepticism. “The leaked OPCW engineers’ assessment is confirmed as genuine, which means the final report actively concealed evidence that the Douma chemical attack was staged by jihadists and the White Helmets,” tweeted British journalist Jonathan Cook. “The OPCW’s other Syria reports must now be treated as worthless too.”

Here’s what will actually happen. These House majority committee chiefs are going to quit their blustering over the next week or so as they discover there is no political value — and plenty of political hazard — in extending the RussiaGate circus. In the meantime, a titanic juridical machine, already a’grinding, will discredit the whole sordid affair and send a number of hapless participants to the federal ping-pong academies. And by then, the long-suffering citizenry will barely give a shit because we will have entered the climactic phase of the Fourth Turning (or Long Emergency, take your pick), in which the operations of everyday business and governance in this country seriously crumble. The Golden Golem of Greatness will be blamed for most of that.

The internal contradictions of Globalism were already blowing up trade and financial relations between the US and China. The Trump tariffs just amount to a clumsy recognition of the fatal imbalances long at work there. As a 25 percent tax on countless Chinese products, the tariffs will punish American shoppers as much as the Chinese manufacturers. Trade wars have a way of escalating into more kinetic conflicts. The sad truth is that both China and the US are beset by dangerous fragilities. Both countries have borrowed themselves into a Twilight Zone of unpayable debt. Both countries are sunk in untenable economic and banking rackets to cover up their insolvency. China’s fate hangs on distant energy supply lines that run through bottlenecks like the Straits of Hormuz and the Straits of Molucca.

The government and Labour have sought to blame each other after cross-party talks to find a compromise Brexit plan collapsed, leaving any remaining hopes of an imminent solution to the impasse in tatters. While both sides insisted the discussions had taken place in good faith, Theresa May said a sticking point had been Labour splits over a second referendum. Labour in turn said the government had been unwilling to compromise and that May’s imminent departure from Downing Street meant there was no guarantee any promises would be kept by a successor such as Boris Johnson. Nick Boles, the former Conservative MP who helped spearhead efforts to prevent a no-deal Brexit in March, said he now feared such a departure was almost inevitable when the EU27’s latest deadline of 31 October is reached.

“It’s game over,” he said. “We only won by one, and it’s very unclear that we would have the same level of Tory support, and for that matter Labour support. We are absolutely convinced that parliament will not find a way to stop no-deal Brexit.” The conclusion to six weeks of intermittent talks, which had angered many Conservative and Labour MPs who feared the nature of the compromise that might result, came with the release of a letter from Jeremy Corbyn to May on Friday. Despite praising the talks as constructive, the Labour leader wrote: “It has become clear that, while there are some areas where compromise has been possible, we have been unable to bridge important policy gaps between us. “Even more crucially, the increasing weakness and instability of your government means there cannot be confidence in securing whatever might be agreed between us.”

Theresa May is facing growing clamour from within her own party to quit immediately as prime minister, after the collapse of Brexit talks with Labour sounded the death knell for her EU withdrawal plans. With Tories trailing in fifth place on a humiliating 9 per cent in one poll for next week’s European parliament elections, furious backbenchers predicted certain defeat when the Withdrawal Agreement Bill comes before the Commons in June. Brexiteers said there was no prospect of Ms May averting a “significant” rebellion by tacking towards them on totemic issues like the Irish backstop and free trade. “There’s nothing she can say,” said one former minister. “No one trusts her any more.”

[..] senior Leave-supporting backbenchers said she should scrap the legislation and hand over immediately to a new leader.Nigel Evans urged her to announce she was not waiting three weeks to discuss the timetable for her departure, as agreed with the chair of the influential 1922 Committee Sir Graham Brady, but would go “forthwith”. Asked if the declaration should come within days, the committee’s joint secretary replied: “I would like her to do it now … It’s only right that the new leadership has the opportunity to become established and form a new cabinet prior to us going into the summer recess.” Former minister David Jones said the PM should recognise that “now is the time that she should stand down”. “On the Conservative benches, most people now want the PM to step down as quickly as possible,” he told The Independent. “Prolonging this is just wasting time at a time when we don’t have much time to waste.”

“If readers take one lesson from this book, I hope it is this: when it comes to financial crises, we’re not in the grip of unseen and hopelessly complex forces. Such crises are neither inevitable nor unpredictable. Runaway private debt and the resulting overcapacity does a better job than any other variable in explaining and predicting financial crises. It is our job to heed those danger signs.” (Vague 2019, p. ix)

This brief book (196 pages, excluding endnotes) on the history and causes of financial crises usurps Kindleberger’s Manias, Panics, and Crashes (Kindleberger 1978) and Mackay’s Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (Mackay 1852) as the definitive work on this vital topic. It surpasses both these works for several reasons, not the least of which is the career and experience of the author. Mackay was a journalist and gifted writer; Kindleberger, an economist with an impressive record in both public service and academia. Both of them observed financial manias and crashes from their respective professional perches, outside the financial system itself.

Vague is an ex-banker, whose fortune was carved in the financial crisis emanating from the bursting of the 1979 oil shock bubble, whose hands-on management established two of America’s biggest consumer credit card companies (First USA, which he sold Bank One in 1997, and Juniper Financial, which he sold to Barclays PLC in 2004), and whose professional access to the voluminous data he saw on the explosion in mortgage debt – from $6 trillion in 2002 to $9 trillion in 2005 – led him to anticipate the Subprime Crisis and exit banking altogether. Vague has seen financial crises from the inside – and not merely survived but prospered.

In the hands of most Americans, this experience would lead to a “How to Get Rich” book. Vague’s ambition with this book is very different: to make society richer by understanding what causes financial crises, and thereby preventing them in the first place. Vague’s banker’s perspective gives him an incomparable advantage over not only MacKay and Kindleberger, but over me as well: having seen the booms and busts of banking from the inside, he knew where to look, and what to look for. For example, I dismissed the possibility of a real-estate bubble as a catalyst to the Great Depression, because Robert Shiller’s data (Figure 1) seemed to show that house prices were flat during the 1920s, and if anything, declining. That was as far as my investigations went.

Portuguese footballer and Juventus striker , Cristiano Ronaldo, has donated US $1.5 million to people of Palestine during the holy month of Ramadan. Regarded as one of the world’s greatest-ever professional football players, Ronaldo is said to have made his generous donation in solidarity with the Palestinian people suffering en mass, and in particular the millions who are currently suffering under the brutal punitive ‘air, land and sea’ economic and humanitarian blockade in Gaza – where Israeli forces have been conducting regular bombing raids which have killed thousands of innocent civilians in recent years. Although sports media rarely highlights this facet of the soccer star, Ronaldo has always been close to the Palestinian cause, publicly rejecting the illegal and genocidal incursions of the Israeli regime on several occasions.

In November 2012, while Gaza was being blanketed with bombs by Israel in their Operation Pillar of Defense, Ronaldo auctioned off his Golden Boot, the prestigious award given to the best European strikers of the season, to raise funds that were later donated to the Palestinian children. The following year, in March 2013, at the end of the match between Portugal and Israel for the 2014 World Cup qualifiers, he refused to exchange his shirt with an Israeli player. Although he shook hands, he excused himself by explaining that he could not wear a shirt with that country’s flag, as reported in the press.

Air pollution may be damaging every organ and virtually every cell in the human body, according to a comprehensive new global review. The research shows head-to-toe harm, from heart and lung disease to diabetes and dementia, and from liver problems and bladder cancer to brittle bones and damaged skin. Fertility, foetuses and children are also affected by toxic air, the review found. The systemic damage is the result of pollutants causing inflammation that then floods through the body and ultrafine particles being carried around the body by the bloodstream. Air pollution is a “public health emergency”, according to the World Health Organization, with more than 90% of the global population enduring toxic outdoor air. New analysis indicates 8.8m early deaths each year – double earlier estimates – making air pollution a bigger killer than tobacco smoking.

But the impact of different pollutants on many ailments remains to be established, suggesting well-known heart and lung damage is only “the tip of the iceberg”. “Air pollution can harm acutely, as well as chronically, potentially affecting every organ in the body,” conclude the scientists from the Forum of International Respiratory Societies in the two review papers, published in the journal Chest. “Ultrafine particles pass through the [lungs], are readily picked up by cells, and carried via the bloodstream to expose virtually all cells in the body.” Prof Dean Schraufnagel, at the University of Illinois at Chicago and who led the reviews, said: “I wouldn’t be surprised if almost every organ was affected. If something is missing [from the review] it is probably because there was no research yet.”

As Macron nears record low approval rating for a French president, he lectures the world through a game of semantics. The ‘brilliance’ is that while not many could have told you the difference between nationalism and patriotism, Macron claims to have it down. Even if it has to be translated into dozens of languages, each of which may have slightly different interpretations of the -local- meaning of the words. Macron has good speech writers, but they don’t write in all the languages involved. So it’s merely semantics. The terms mean to everyone what they want them to mean.

The take-away: according to Macron, patriotism can exist along globalism, nationalism cannot. A jibe against Trump. Which also means that because Xi Jinping touts globalism all the time, we must accept, if we follow Macron, that he is not a nationalist, but a patriot.

Emmanuel Macron has issued a hard-hitting warning about the dangers of nationalism and of countries that put their interests before the collective good – in front of Donald Trump and Vladimir Putin. The French president denounced those who evoke nationalist sentiment to disadvantage others, calling it a “betrayal of patriotism” and moral values. The US and Russian leaders listened in silence as Mr Macron took a swipe at the rising tide of populism in the US and Europe, warning: “The old demons are rising again, ready to complete their task of chaos and of death.” During a gathering of dozens of world leaders to mark 100 years since the end of the First World War, the French president went on: “Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism.

“In saying, ‘Our interests first, whatever happens to the others’, you erase the most precious thing a nation can have, that which makes it live, that which causes it to be great and that which is most important: its moral values.” [..] In a speech lasting nearly 20 minutes, Mr Macron also called on fellow leaders to fight for peace. “Ruining this hope with a fascination for withdrawal, violence or domination would be a mistake for which future generations would rightly find us responsible,” he said. The French leader also defended the European Union and the United Nations, which he said guaranteed peace and enshrined “a spirit of cooperation to defend the common property of a world whose destiny is inextricably linked”.

Russian President Vladimir Putin said he had a brief but good conversation with US leader Donald Trump at World War I centenary events in Paris, Russian media reported. When journalists asked Putin whether he managed to speak to Trump on Sunday, he said: “Yes,” Russian state news agency RIA Novosti reported. Asked how it went, Putin said: “Well.” He did not provide further details, but the French presidency said the pair had a wide-ranging discussion during lunch after the commemoration. Host and French President Emmanuel Macron was there and German Chancellor Angela Merkel took part in some of the exchanges, the presidency said.

Subjects discussed included the situation in the Middle East, notably Syria, Iran and Saudi Arabia, and North Korea. White House spokeswoman Sarah Sanders said Trump had sat with world leaders including Putin, Macron and Merkel at lunch and the group had held “very good and productive discussions”. “The leaders discussed a variety of issues, including the INF (nuclear treaty), Syria, trade, the situation in Saudi Arabia, sanctions, Afghanistan, China, and North Korea,” she said. Expectations have been growing for a new Trump-Putin meeting as tensions pile up over the Cold War-era Intermediate-Range Nuclear Forces Treaty (INF) and US sanctions against Moscow.

People in Russian-backed areas of eastern Ukraine re-elected separatist leaders at the weekend, according to results released Monday of polls condemned as illegal by Kiev and Western countries. Elections in the Donetsk and Lugansk “People’s Republics”, controlled by separatists since breaking away from Ukraine’s pro-Western government in 2014, took place after the killing of the rebel Donetsk “president” in a bomb attack in August. Security was tight for Sunday’s vote with gun-toting, camouflage-clad guards deployed to ensure order. Denis Pushilin, the 37-year-old acting Donetsk leader, was elected with 61 percent of the vote with almost all ballots counted, the local electoral commission said. Leonid Pasechnik, the acting Lugansk leader, took 68 percent of the vote.

French President Emmanuel Macron and German Chancellor Angela Merkel branded the vote “illegal and illegitimate” following a meeting with Ukraine President Petro Poroshenko on the sidelines of World War I commemorations also attended by Russian leader Vladimir Putin on Sunday. “These so-called elections undermine the territorial integrity and sovereignty of Ukraine,” the pair said in a joint statement. Washington and Brussels had asked Russia not to allow the polls to go ahead, arguing they would further hamper efforts to end a conflict that has killed more than 10,000 people since 2014. “The people in eastern Ukraine will be better off within a unified Ukraine at peace rather than in a second-rate police state run by crooks and thugs, all subsidized by Russian taxpayers,” tweeted Kurt Volker, the US special envoy to Ukraine, on the day of the polls.

Prime Minister Theresa May will say on Monday Britain is “open to a different relationship” with Russia if Moscow takes a new path and stops “attacks” that undermine international treaties and security. Just a year ago, May used her annual speech at the Lord Mayor’s Banquet to accuse Moscow of military aggression and of meddling in elections, some of her strongest criticism even before the poisoning of a former Russian spy in Salisbury. This year, she will tell London’s financial center that the action taken since – including the largest ever coordinated expulsion of Russian intelligence officers – has deepened her belief in a “collective response” to such threats.

“We will continue to show our willingness to act, as a community of nations, to stand up for the rules around the world,” May will say, according to excerpts of her speech. Describing evolving threats, May will say the past year, including Salisbury, has “shown that while the challenge is real, so is the collective resolve of likeminded partners to defend our values, our democracies, and our people.” “But, as I also said a year ago, this is not the relationship with Russia that we want … We remain open to a different relationship – one where Russia desists from these attacks that undermine international treaties and international security,” she will say.

Former British foreign minister Boris Johnson accused Prime Minister Theresa May on Sunday of forcing through a deal that would keep the country locked in the European Union’s customs union after Brexit in what he described as a “total surrender”. “I really can’t believe it but this government seems to be on the verge of total surrender,” he wrote in his weekly column in the Telegraph newspaper. “I want you to savour the full horror of this capitulation … we are on the verge of signing up for something even worse than the current constitutional position. These are the terms that might be enforced on a colony.”

Theresa May has been forced to abandon plans for an emergency cabinet meeting to approve a Brexit deal, after fresh opposition at home and abroad plunged her timetable into turmoil. The prime minister shelved the meeting, pencilled in for Monday, slamming on the brakes after fierce resistance in her cabinet and in Brussels threatened to derail the path to an agreement. A government source conceded that an outline deal might not be ready by Tuesday – making it increasingly unlikely that a special EU summit to sign it off can be held in November, as hoped.

That would leave the UK having to ramp up hugely expensive no-deal preparations and in danger of being unable to pass all necessary legislation before the Brexit deadline next March. At home, Ms May faced an open challenge to her plans from Andrea Leadsom, the Commons leader, who vowed the UK “cannot be held against its will” by the backstop plan for the Irish border. Ms Leadsom became the second cabinet minister to insist on a unilateral power to escape being bound in the EU customs union – something explicitly ruled out by Brussels.

Alibaba on Sunday tore through last year’s Singles Day sales record, racking up more than $30.8 billion in the 24-hour shopping event. Gross merchandise value (GMV), a figure that shows sales across the Chinese e-commerce giant’s various shopping platforms, surpassed last year’s $25.3 billion record at around 5:34 p.m. SIN/HK (4:34 a.m. ET) on Sunday, and kept marching higher through the rest of the day. In Chinese currency terms, GMV totaled 213.5 billion yuan, easily beating last year’s figure of 168.2 billion yuan and representing a nearly 27 percent year-on-year rise. That was, however, smaller than the 39 percent year-on-year growth recorded in 2017.

Alibaba’s Singles Day GMV beat last year’s figure in yuan terms earlier than it toppled the dollar record. The Chinese currency is weaker against the greenback from a year ago, which means more sales in yuan are required to get the same dollar amount. It was the 10th edition of the annual Singles Day event, which is also called the Double 11 shopping festival because it falls on Nov. 11. During the 24-hour period, Alibaba offered huge discounts across its e-commerce sites such as Tmall. Alibaba’s Singles Day sales haul easily exceeded the spending by consumers during any single U.S. shopping holiday.

“I think China’s manipulating their currency, absolutely,” President Trump said back in August. Yet the People’s Bank of China (PBoC) was, and has been, intervening to keep the RMB up, and not to push it down, as Trump was alleging. And we believe such interventions are about to get much larger. Here is why. Over the past two years, as our left-hand figure below shows, foreign portfolio investors have piled prodigiously into Chinese assets, helping to support the RMB. But history suggests this trend is about to reverse. While inflows have been rising, Chinese stocks have been tumbling—they are down over 20 percent from their January peak. Dreadful performance like this typically drives funds out of emerging markets. We may be seeing the beginning of such outflows in China.

Repatriation of liquid foreign capital will make it far more challenging for China to keep its currency up. Of course, China could change course and let it fall, but that risks exacerbating the foreign-debt burden of its highly leveraged corporates. It could raise interest rates, but that would further slow a slowing economy. It could, to keep capital at home, demand higher returns on its foreign lending, but that would mean sacrificing its efforts to subsidize its companies operating abroad, as well those aimed at putting dollars to the service of geostrategic objectives—like Belt and Road. n short, then, there is every reason to expect that the PBoC will boost its support for the RMB by selling dollar reserves.

This is what it did back in 2015, when a plunging stock market scared away foreign capital. So in spite of President’s Trump’s repeated charges that China is manipulating its currency for competitive advantage in trade, all evidence suggests that it will continue to do the opposite. But if China were to sell reserves at the same pace as in 2015, its reserve levels would, by mid-2020, actually fall below the safety threshold implied by the IMF’s framework for reserve adequacy—as shown in the right-hand figure above.

What the heck happened to oil prices? But more significantly, what does it mean for the broader stock market and the global economy? That is what has some Wall Street investors scratching their noggins, as crude futures and U.S. stocks staged a tandem tumble this week, just when investors thought the worst was over following a bruising October for risk assets. Now, oil futures are unraveling, down at least 20% after putting in a 52-week high early last month. And it isn’t so much the descent into bear-market territory—as the recent slump for crude can be characterized—as it is the celerity of the selloff that has market participants unsettled.

About five weeks: That’s all it took for bulls to pivot from cavalierly pondering if $100-a-barrel oil was a genuine possibility before the end of 2018 on the back of Iranian oil export sanctions imposed by the U.S. on Nov. 4, to wondering how ugly the current implosion in black gold could get before finding a bottom. On Friday, West Texas Intermediate crude for December delivery lost 48 cents, or 0.8%, to settle at $60.19 a barrel on the New York Mercantile Exchange, for the lowest front-month contract settlement since March 8, according to FactSet data. Prices lost 4.7% for the week, tallying their fifth straight weekly drop. The 10th session decline in a row matched the longest skid since 1984.

But beyond that, the most important question is this: What does oil’s decline really mean? That is the query that Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., posed to MarketWatch via email last week as the decline in oil was gaining steam. “Very large monthly down moves in crude oil has often heralded something more ominous,” he wrote on Nov. 1. “Most market observers think there is enough damage to see a bottom in stocks. Consensus therefore looks for new record highs or a solid bounce back. We strongly disagree with this perspective.”

Is debt good or bad? The answer is “Yes.” Debt is future spending pulled forward in time. It lets you buy something now for which you otherwise don’t have cash yet. Whether it’s wise or not depends on what you buy. Debt to educate yourself so you can get a better job may be a good idea. Borrowing money to finance your vacation? Probably not. The problem is that many people, businesses, and governments borrow because they can. It’s been possible in the last decade only because central banks made it so cheap. It was rational in that respect. But it is growing less so as the central banks start to tighten. Earlier this year, I wrote a series of articles predicting a debt “train wreck” and eventual liquidation. I dubbed it “The Great Reset.”

I estimated we have another year or two before the crisis becomes evident. Now I’m having second thoughts. Recent events tell me the reckoning could be closer than I thought just a few months ago. Central banks enable debt because they think it will generate economic growth. Sometimes it does. The problem is they create debt with little regard for how it will be used. That’s how we get artificial booms and subsequent busts. We are told not to worry about absolute debt levels so long as the economy is growing in line with them. That makes sense. A country with a larger GDP can carry more debt. But that is increasingly not what is happening. Let me give you two data points.

Lacy Hunt tracks data that shows debt is losing its ability to stimulate growth. In 2017, one dollar of non-financial debt generated only 40 cents of GDP in the US. It’s even less elsewhere. This is down from more than four dollars of growth for each dollar of debt 50 years ago. This has seriously worsened over the last decade. China’s debt productivity dropped 42.9% between 2007 and 2017. That was the worst among major economies, but others lost ground, too. All the developed world is pushing on the same string and hoping for results. Now, if you are used to using debt to stimulate growth, and debt loses its capacity to do so, what happens next? You guessed it: The brilliant powers-that-be add even more debt.

Donald Trump has ordered the FBI to carry out a fresh investigation into his nominee for the Supreme Court, after Republicans were obliged to delay a full confirmation vote after being blind-sided by one of their own senators. During a day of blurred and frequently confusing drama on Capitol Hill, the Senate Judiciary Committee on Friday voted 11-10 to approve Brett Kavanaugh for a confirmation vote in the full senate. But it did so, only after an 11th hour intervention from Jeff Flake, a senator from Arizona, who said his support in the later confirmation vote was dependent on the FBI being given a week to carry out an investigation into Mr Kavanaugh, the subject of sexual assault allegations from several women, all of which he denies.

“This country is being ripped apart here,” Mr Flake told the committee, after a vote scheduled for 1.30pm was delayed. “We ought to do what we can to make sure that we do all due diligence with a nomination this important.” Mr Flake’s deeds sent senior Republicans scrambling to decide how best to proceed. The senate’s Republican chairman, Chuck Grassley, who has long said he did not see the need for an additional investigation into Mr Kavanaugh, said it was the decision of Senate majority leader Mitch McConnell on when to hold the confirmation vote.

Within a matter of hours, Mr Grassley issued a statement saying he would ask the White House to request the FBI carry out an additional background check. Shortly afterwards, White House press secretary Sarah Huckabee Sanders released a statement from the president, which read: “I’ve ordered the FBI to conduct a supplemental investigation to update Judge Kavanaugh’s file. As the senate has requested, this update must be limited in scope and completed in less than one week.”

[..] Mr Flake may have been motivated to act by the words of two protesters who confronted him in a senate elevator after it was initially announced he would back Mr Kavanaugh. “What you are doing is allowing someone who actually violated a woman to sit on the Supreme Court. This is not tolerable. You have children in your family. Think about them. I have two children,” shouted one of the women, Ana Maria Archila. “I cannot imagine that for the next 50 years they will have to have someone in the Supreme Court who has been accused of violating a young girl. What are you doing, sir?”

Senator Maize Hirono of Hawaii recently stated, “Not only do women like [Kavanaugh’s accuser], who bravely come forward, need to be heard, but they need to be believed.” By definition this is neither fair nor impartial, and turns the entire process into a Kangaroo Court… which is what the Senate has become. At a certain point yesterday, one Senator introduced multiple pieces of evidence on behalf of the accuser, including ‘expert reports’ that justify her inability to remember details from the assault. This is truly bizarre. These Senators are playing the role of judge in this matter. It seems impossible to do this while simultaneously acting as advocate for the accuser.

Another Senator sat smugly and sanctimoniously, leering down at Brett Kavanaugh and demanding explanations about code words for beer and flatulence that date back to Kavanaugh’s high school days. The fact that a United States Senator would actually consider this important evidence is an utter embarrassment. Another disgusting perversion of justice is that the United States Senate actually felt compelled to negotiate with the accuser about when/how she would testify. For example, the accuser wanted to prohibit certain questions, control who could/could not ask questions, determine the order of witness testimony, etc. This is simply NOT how the justice system is supposed to work.

[..] the saddest part – this manner of Inquisition… trial by social media… has now been condoned and advanced by the United States Senate, an institution whose members have ALL taken a solemn oath to support and defend the Constitution which they are now violating in the worst way. Clearly the Senate is no longer an assembly of kings… but a brood of bickering, immature weaklings. (The only resilience displayed has been from the accused and accuser, both of whom have had to endure insane public scrutiny.) There’s obviously an agenda here.

Perhaps some Senators are trying to win points with the #metoo movement for the upcoming elections. Or they’re intentionally blocking Kavanaugh simply because he is a Trump nominee. Whatever their reasons, they may be victorious in achieving their desired outcome. But it will be a Pyrrhic victory… for it will come at the expense of establishing a dangerous new standard that destroys the most important principles of Justice.

Without much fanfare or public discussion, Congress has decided to push the U.S. into deeper fiscal responsibility. Earlier this week, the House passed another Continuing Resolution (CR) to keep the government from “shutting down” prior to the mid-term elections. “The House on Wednesday passed an $854 billion spending bill to avert an October shutdown, funding large swaths of the government while pushing the funding deadline for others until Dec. 7. The bill passed by 361-61, a week after the Senate passed an identical measure by a vote of 93-7.” For almost a decade, Congress has failed to pass, and operate, underneath a budget.

Of course, without any repercussions from voters in demanding that Congress “does their job,” the path to fiscal insolvency continues to grow. The Committee For A Responsible Federal Budget made the following statement: “We’re pleased policymakers have likely avoided a shutdown and actually appropriated most of this year’s discretionary budget on time. But let’s not forgot that Congress did so without a budget and had to grease the wheels with $153 billion to pass these bills. That isn’t function; it’s a fiscal free-for-all.” Of course, with trillion-dollar deficits just around the corner, the negative impact from unbridled spending and debt increases will begin to reverse the positive effects from deregulation and tax reform.

The bigger problem with the $854 billion CR just passed by the House, and awaiting the President’s signature, is that it only covers spending from now until December. Such means that by the time we get the full 2019 budget funded, with the annual automatic increases still in place, we will be looking at more than $2 Trillion in annual spending. Such will require further increases in debt issuance at a time when there are potentially fewer buys of Treasuries readily available. As shown in the chart below, with the major Central Banks reducing their balance sheets simultaneously, some of the more major buyers are being removed from the market. “Central bank balance sheets have shrunk by over half-a-trillion dollars since March. This decrease in global liquidity – in the face of a global slowdown – raises the risk of policy mistakes much higher than is commonly assumed.” – ECRI

For the latest confirmation of the upside down market, look no further than corporate bonds where the riskiest, CCC-rated junk bonds are set to make a positive return for the 3rd consecutive year, the longest winning streak since records began in 1997. Not only have the lowest quality junk bonds, those rated CCC or lower, generating respectable absolute returns of 5.8% YTD, they have also outperformed higher quality debt with a 1% total return so far this month, according to Bloomberg and ICE data. Additionally, the lowest rated junk bonds have also outperformed the broader junk bond index, which has returned 1.9% YTD.

And while the key contributor to the outperformance of lowest-rated bonds is demand for, well, higher yielding paper as investors continue to chase returns, a key structural issue has been the lack of HY supply, which at $150 billion YTD is the lowest since 2009. Meanwhile, as investors scramble for any paper that promises a material yield, regardless of underlying fundamentals, investment grade corporate bond returns have, in the worlds of Bloomberg’s James Crombie “fallen from darling to deadbeat.”

Tesla Inc. CEO Elon Musk believes he had a verbal agreement in place with Saudi Arabia’s sovereign-wealth fund to help finance a plan to take the auto maker private, according to a person familiar with the matter, a contention that could preview how he will fight regulators’ accusation that he misled shareholders. Musk was sued Thursday by the Securities and Exchange Commission, which alleged that he misled investors when he tweeted last month that he had funding secured to lead a Tesla buyout. The agency, which is seeking to oust Musk from Tesla, said in its complaint that he “knew that he had never discussed a going-private transaction at $420 per share with any potential funding source.”

Musk believes the SEC’s effort is flawed in assuming that a written agreement and fixed price were necessary for a deal, the person said. Musk also thinks regulators aren’t taking into account that Middle Eastern businesses routinely operate using verbal agreements in principle, the person said. In addition, Musk has told people that he could have led a go-private transaction using his own stake in SpaceX, if major Tesla investors were on board. SpaceX is the privately held aerospace firm that Mr. Musk controls and is valued at tens of billions of dollars.

Labour has accused Theresa May of leading “the most divided government ever” as it released a dossier claiming a third of Conservative MPs have publicly criticised either the government or a Tory colleague within the last year. On the eve of the Conservatives’ annual conference, Labour said more than 100 Tory MPs have recently turned their fire on a colleague or on government policy. The report said 80 per cent of the attacks were directed at Ms May or her government, with 83 MPs having criticised one of the two. The dossier was released as a number of senior Conservatives spoke out against Ms May’s leadership and voiced fears about the prospects of the party.

Much of the criticism outlined in the Labour document relates to Ms May’s Chequers plan for Brexit, which has been widely condemned by both Eurosceptics and Remain supporters on the Tory benches. It has been called “unworkable” by Justine Greening, the pro-European former education secretary, while former Brexit minister Steve Baker said it could lead to a “catastrophic split” in the Conservative Party. Mike Penning, previously seen as an ally of Ms May, described the plan as “dead as a dodo”, and former cabinet minister Priti Patel said it would be “a disaster for our country”. Ms May is facing mounting pressure to ditch the proposals, which are also highly unpopular with Tory members and have been rejected by EU leaders.

Furious ministers rounded on Boris Johnson for suggesting the UK could renege on its Brexit agreements over the Irish border, calling it unworkable and criticising the former foreign secretary for denouncing agreements made while he was a cabinet minister. The Department for Exiting the European Union issued a defiant statement rejecting Johnson’s alternative, laid out in a 4,000-word Telegraph article, saying it was “not a workable or negotiable plan,” less that two days before the start of the Conservative party conference in Birmingham. Government sources mocked Johnson’s disavowal of the December withdrawal agreement, when he had been part of the cabinet that approved it, dismissing his intervention as “another very lengthy article which doesn’t offer any answers”.

Speaking ahead of the conference, May said the government was on the verge of a Brexit deal, despite admitting after the EU summit in Salzburg that the two sides remained some distance apart on customs and the Northern Irish border. “The right deal is close – and with it the opportunity to make life better for ordinary working people,” she said. But Johnson continued his public intervention with a series of television interviews – his first since quitting over Chequers – criticising the prime minister, warning May that she risked betraying the wishes of leave voters if she persisted with the Chequers deal but stopping short of calling her to go. Johnson told the BBC: “If you stick with Chequers, the electorate of this country will look at what we have produced and think how on Earth was that the outcome of voting leave.”

As deadlines approach and red lines are redrawn in the United Kingdom’s impending withdrawal from the European Union, it is imperative for the people of Britain to regain democratic control over a process that is opaque and ludicrously irrational. The question is: How? Democracy can never aspire to being more than a work in progress. Decisions made collectively must constantly be reappraised collectively in the light of new evidence. Yet, in the UK’s current circumstances, nothing would be more poisonous to democracy than revisiting Brexit by means of a second referendum.

Both sides, Leavers and Remainers, feel betrayed. Even though Brexit was meant to restore its sovereignty, Parliament has no real say in a process that will mark Britain for decades to come. The Scots and the people of Northern Ireland are hostages to a distinctly English feud that could do them serious damage. The young feel the old have hijacked their future, while the old feel that their accumulated wisdom and legitimate concerns are being ignored by insiders striking bad deals behind closed doors on behalf of vested interests. In short, British democracy is failing its latest and most stringent test.

But a fresh referendum cannot be the answer to the unfolding disaster triggered by the original referendum. In June 2016, a stark choice was available to the people of Britain: leave the EU or stay in. While one can question the wisdom of making such a collective choice via a referendum, the logical coherence of the enterprise was beyond dispute. Once the verdict came in, and the process stipulated by the Treaty of Lisbon’s Article 50 was triggered, no binary yes-or-no choice to steer Britain out of its mess became available. In fact, there are now at least five options that must be collectively appraised.

Nearly 50m Facebook accounts were compromised by an attack that gave hackers the ability to take over users’ accounts, Facebook revealed on Friday. The breach was discovered by Facebook engineers on Tuesday 25 September, the company said, and patched on Thursday. Users whose accounts were affected will be notified by Facebook. Those users will be logged out of their accounts and required to log back in. “I’m glad we found this and fixed the vulnerability,” Mark Zuckerberg said on a conference call with reporters on Friday morning. “But it definitely is an issue that this happened in the first place. I think this underscores the attacks that our community and our services face.”

The security breach is believed to be the largest in Facebook’s history and is particularly severe because the attackers stole “access tokens”, a kind of security key that allows users to stay logged into Facebook over multiple browsing sessions without entering their password every time. Possessing a token allows an attacker to take full control of the victim’s account, including logging into third-party applications that use Facebook Login. The security breach comes at a time of significant strife for the social media company, which has faced mounting criticism over issues including foreign election interference, the flow of misinformation, hate speech, and data privacy.

A Danish-flagged cargo ship has successfully passed through the Russian Arctic, in a trial voyage showing that melting sea ice could potentially open a new trade route from Europe to east Asia. The Venta Maersk made the journey as a one-off trial, said Palle Laursen, the chief technical officer of A.P. Moller-Maersk, the world’s biggest shipping group. The ship, carrying a cargo of frozen fish, arrived in St Petersburg on Friday, after leaving Russia’s Pacific port city of Vladivostok on 22 August. “The trial allowed us to gain exceptional operational experience,” said Laursen, adding the ship had performed well in the unfamiliar environment.

The Northern Sea route could be a shorter journey for ships travelling from east Asia to Europe than the Northwest Passage over Canada because it will likely be free of ice sooner due to climate change. Experts say it could reduce the travel distance from east Asia to Europe from the 21,000 kilometres (13,000 miles) it takes to go via the Suez Canal, to 12,800 kilometres (8,000 miles). This would cut transit time by 10 to 15 days. It’s not the first time a cargo vessel has completed the Russian Arctic route, and Maersk underlined that the journey was “to gain operational experience in a new area and to test vessel systems”. “Currently, we do not see the Northern Sea route as a viable commercial alternative to existing east-west routes,” Laursen said.

I’ve been saying for a long time that the BRI (Belt and Road) is China’s attempt at exporting its overcapacity. They make poor countries borrow billions, which these can’t pay back. And then… Only now do other parties wake up to that. And Xi is trying to do some damage control.

China’s massive and expanding “Belt and Road” trade infrastructure project is running into speed bumps as some countries begin to grumble about being buried under Chinese debt. First announced in 2013 by President Xi Jinping, the initiative also known as the “new Silk Road” envisions the construction of railways, roads and ports across the globe, with Beijing providing billions of dollars in loans to many countries. Five years on, Xi has found himself defending his treasured idea as concerns grow that China is setting up debt traps in countries which may lack the means to pay back the Asian giant. “It is not a China club,” Xi said in a speech on Monday to mark the project’s anniversary, describing Belt and Road as an “open and inclusive” project.

Xi said China’s trade with Belt and Road countries had exceeded $5 trillion, with outward direct investment surpassing $60 billion. But some are starting to wonder if it is worth the cost. During a visit to Beijing in August, Malaysia’s Prime Minister Mahathir Mohamad said his country would shelve three China-backed projects, including a $20 billion railway. The party of Pakistan’s new prime minister, Imran Khan, has vowed more transparency amid fears about the country’s ability to repay Chinese loans related to the multi-billion-dollar China-Pakistan Economic Corridor. Meanwhile the exiled leader of the opposition in the Maldives, Mohamed Nasheed, has said China’s actions in the Indian Ocean archipelago amounted to a “land grab” and “colonialism”, with 80 percent of its debt held by Beijing.

Sri Lanka has already paid a heavy price for being highly indebted to China. Last year, the island nation had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the $1.4-billion project.

African countries have shown a healthy appetite for Chinese loans but some experts now worry that the continent is gorging on debt, and could soon choke. The Entebbe-Kampala Expressway is still something of a tourist attraction for Ugandans, nearly three months after it opened. The 51km (31 mile), four-lane highway that connects the country’s capital to the Entebbe International Airport was built by a Chinese company using a $476m (£366m) loan from the China Exim Bank. It has cut what was a torturous two-hour journey through some of Africa’s worst traffic into a scenic 45-minute drive into the East Africa nation’s capital. Uganda has taken $3bn of Chinese loans as part of a wider trend that Kampala-based economist Ramathan Ggoobi calls its “unrivalled willingness to avail unconditional capital to Africa”.

“This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site for rails, roads, electricity dams, stadia, commercial buildings and so on,” the Makerere University Business School lecturer told the BBC. The Chinese loans come as many African countries are once again in danger of defaulting on their debts more than a decade after many had their outstanding borrowing written off. At least 40% of low-income countries in the region are either in debt distress or at high risk, the International Monetary Fund warned in April.

Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe were considered to be in debt distress at the end of 2017 while Zambia and Ethiopia were downgraded to “high risk of debt distress”. “In 2017 alone, the newly signed value of Chinese contracted projects in Africa registered $76.5bn,” Standard Bank’s China Economist Jeremy Stevens wrote in a note. “However, despite a sizeable remaining infrastructure deficit on the continent, there is a concern that African countries’ debt-service ability will soon dissolve,” he says.

Xi said at a business forum before the start of a triennial China Africa summit their friendship was time-honoured and that China’s investment in Africa came with no political strings attached. “China does not interfere in Africa’s internal affairs and does not impose its own will on Africa. What we value is the sharing of development experience and the support we can offer to Africa’s national rejuvenation and prosperity,” Xi said. “China’s cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects but in places where they count the most,” he said.

China has denied engaging in “debt trap” diplomacy but Xi is likely to use the gathering of African leaders to offer a new round of financing, following a pledge of $60 billion at the previous summit in South Africa three years ago. Chinese officials have vowed to be more cautious to ensure projects are sustainable. China defends continued lending to Africa on the grounds that the continent still needs debt-funded infrastructure development. Beijing has also fended off criticism it is only interested in resource extraction to feed its own booming economy, that the projects it funds have poor environmental safeguards, and that too many of the workers for them are flown in from China rather than using African labour.

A partner at Foley & Lardner, Ms. Mitchell was astonished to find herself dragged into the Russia investigation on March 13 when Democrats on the House Intelligence Committee issued an interim report. They wrote that they still wanted to interview “key witnesses,” including Ms. Mitchell, who they claimed was “involved in or may have knowledge of third-party political outreach from the Kremlin to the Trump campaign, including persons linked to the National Rifle Association (NRA).” Two days later the McClatchy news service published a story with the headline “NRA lawyer expressed concerns about group’s Russia ties, investigators told.” The story cited two anonymous sources claiming Congress was investigating Ms. Mitchell’s worries that the NRA had been “channeling Russia funds into the 2016 elections to help Donald Trump.”

Ms. Mitchell says none of this is true. She hadn’t done legal work for the NRA in at least a decade, had zero contact with it in 2016, and had spoken to no one about its actions. She says she told this to McClatchy, which published the story anyway. Now we’re learning how this misinformation got around, and the evidence points to Glenn Simpson of Fusion GPS, the outfit that financed the infamous Steele dossier. New documents provided to Congress show that Mr. Simpson, a Fusion co-founder, was feeding information to Justice Department official Bruce Ohr. In an interview with House investigators this week, Mr. Ohr confirmed he had known Mr. Simpson for some time, and passed at least some of his information along to the FBI.

In handwritten notes dated Dec. 10, 2016 that the Department of Justice provided to Congress and were transcribed for us by a source, Mr. Ohr discusses allegations that Mr. Simpson made to him in a conversation. The notes read: “A Russian senator (& mobster) . . . [our ellipsis] may have been involved in funneling Russian money to the NRA to use in the campaign. An NRA lawyer named Cleta Mitchell found out about the money pipeline and was very upset, but the election was over.”

The short-term impact of a no-deal Brexit on Britain’s economy would be “chaotic and severe”, jeopardising jobs and disrupting trade links, warn experts from the thinktank UK in a Changing Europe. The Brexit secretary, Dominic Raab, has said he believes 80% of the work on completing an exit deal with the EU27 is already done, as negotiations enter their final phase. But his cabinet colleague Liam Fox recently suggested a no-deal scenario – which would occur if negotiations broke down, or both sides agreed to disagree – was the most likely outcome. In a 30-page updated assessment of the impact of no deal, the thinktank said on Monday it would mean “the disappearance without replacement of many of the rules underpinning the UK’s economic and regulatory structure”.

Its analysis claimed that in the short term: • Food supplies could be temporarily disrupted – the beef trade could collapse, for example, as Britain is heavily reliant on EU imports, and would be forced to apply tariffs, in accordance with World Trade Organisation (WTO) rules. • European health insurance cards, which allow British tourists free healthcare in the EU, would be invalid from Brexit day. • There would almost certainly have to be a “hardening of the border” between Northern Ireland and the Irish Republic, including some “physical manifestation”. • The status of legal contracts and commercial arrangements with EU companies would be unclear, as the UK would become a “third country” overnight. • Increased and uncertain processing times for goods at the border would be “nearly certain”, risking queues at Dover and forcing firms to rethink their supply chains.

In the longer term, UK in a Changing Europe’s experts say, the UK would have time to normalise its trading status, and agreements could be struck with the EU27 to tackle many other practical challenges. “It should not be assumed that the damage, while real, will necessarily be long-lasting,” the report says.

Boris Johnson has used his first newspaper column of the new parliamentary term to attack Theresa May’s Chequers plan, saying it means the UK enters Brexit negotiations with a “white flag fluttering”. The declaration amounts to a significant escalation the former foreign secretary’s guerrilla campaign against the prime minister and her Chequers plan a day before the Commons returns and at a time when party disquiet over the direction of the divorce talks is mounting. Johnson wrote that “the reality is that in this negotiation the EU has so far taken every important trick. The UK has agreed to hand over £40 billion of taxpayers’ money for two thirds of diddly squat”.

Johnson added that by adopting the Chequers plan, which will see the UK adopt a common rule book for food and goods, “we have gone into battle with the white flag fluttering over our leading tank”. It will be “impossible for the UK to be more competitive, to innovate, to deviate, to initiate, and we are ruling out major free trade deals,” he added. The intervention comes after a summer in which the former minister, who resigned over the Chequers deal, had avoided touching on Brexit in his Daily Telegraph column – although he did unleash a storm of complaint by describing fully veiled Muslim women as looking like letter boxes and bank robbers. It will be seen as preparing the ground for a leadership challenge to May just as the Brexit negotiations reach their critical phase in the autumn, which is to culminate in any final deal agreed by the UK government being put to parliament for a vote.

The number of officials who have left the Whitehall department trying to deliver Brexit is equivalent to more than half of its total staff, shock new figures reveal. Data seen by The Independent shows hundreds of civil servants went elsewhere as the department tried to get on its feet and cobble together a negotiating stance for the UK over the last two years. The exodus means the average age of workers left in the department is 32, though they are tasked with winning a complex deal that could change Britain for a generation.

The information obtained by the Liberal Democrats appears to corroborate previous reports about an extraordinarily high turnover at the Department for Exiting the European Union (Dexeu), with critics now claiming it points to “deep instability” at the heart of the government’s Brexit operation. According to the turnover data obtained under freedom of information, a staggering 357 staff have left the Dexeu in just two years. Yet the total number of those employed at the Whitehall department amounts to only 665, indicating a turnover rate of more than 50 per cent in that period.

Britain’s leading role in evaluating new medicines for sale to patients across the EU has collapsed with no more work coming from Europe because of Brexit, it has emerged. The decision by the European Medicines Agency to cut Britain out of its contracts seven months ahead of Brexit is a devastating blow to British pharmaceutical companies already reeling from the loss of the EMA’s HQ in London and with it 900 jobs. All drugs sold in Europe have to go through a lengthy EMA authorisation process before use by health services, and the Medicines & Healthcare products Regulatory Agency (MHRA) in Britain has built up a leading role in this work, with 20-30% of all assessments in the EU.

The MHRA won just two contracts this year and the EMA said that that work was now off limits. “We couldn’t even allocate the work now for new drugs because the expert has to be available throughout the evaluation period and sometimes that can take a year,” said a spokeswoman. In a devastating second blow, existing contracts with the MHRA are also being reallocated to bloc members. Martin McKee, the professor of European health at the London School of Hygiene and Tropical Medicine, who has given evidence to select committees about Brexit, said it was a disaster for the MHRA, which had about £14m a year from the EMA. The head of the Association of British Pharmaceutical Industry said it was akin to watching a “British success story” being broken up.

Almost exactly six years ago, the Spanish government requested a €100 billion bailout from the Troika (ECB, European Commission and IMF) to rescue its bankrupt savings banks, which were then merged with much larger commercial banks. Over €40 billion of the credit line was used; much of it is still unpaid. Yet Spain’s banking system could soon face a brand new crisis, this time not involving small or mid-sized savings banks but instead its alpha lenders, which are heavily exposed to emerging economies, from Argentina to Turkey and beyond. In the case of Turkey’s financial system, Spanish banks had total exposure of $82.3 billion in the first quarter of 2018, according to the Bank for International Settlements.

That’s more than the combined exposure of lenders from the next three most exposed economies, France, the USA, and the UK, which reached $75 billion in the same period. According to BIS statistics, Spanish banks’ exposure to Turkey’s economy almost quadrupled between 2015 and 2018, largely on the back of Spain’s second largest bank BBVA’s madcap purchase of roughly half of Turkey’s third largest lender, Turkiye Garanti Bankasi. Since buying its first chunk of the bank from the Turkish group Dogus and General Electric in 2010, BBVA has lost over 75% of its investment under the combined influence of Garanti’s plummeting shares and Turkey’s plunging currency.

But the biggest fear, as expressed by the ECB on August 10, is that Turkish borrowers might not be hedged against the lira’s weakness and begin to default en masse on foreign currency loans, which account for a staggering 40% of the Turkish banking sector’s assets. If that happens, the banks most exposed to Turkish debt will be hit pretty hard. And no bank is as exposed as BBVA, though the lender insists its investments are well-hedged and its Turkish business is siloed from the rest of the company. In Argentina, whose currency continues to collapse and whose economy is now spiraling down despite an IMF bailout, Spanish banks’ total combined investments amounted to $28 billion in the first quarter of 2018. That represented almost exactly half of the $58.9 billion that foreign banks are on the hook for in the country. The next most at-risk banking sector, the US, has some $10 billion invested.

Real wage growth has been nonexistent in the United States for more than 30 years. But as America enters the 10th year of the recovery—and the longest bull market in modern history—there are nervous murmurs, even among capitalism’s most reliable defenders, that some of its most basic mechanisms might be broken. The gains of the recovery have accrued absurdly, extravagantly to a tiny sliver of the world’s superrich. A small portion of that has trickled down to the professional classes—the lawyers and money managers, art buyers and decorators, consultants and “starchitects”—who work for them. For the declining middle and the growing bottom: nothing.

This is not how the economists told us it was supposed to work. Productivity is at record highs; profits are good; the unemployment rate is nearing a meager 4 percent. There are widely reported labor shortages in key industries. Recent tax cuts infused even more cash into corporate coffers. Individually and collectively, these factors are supposed to exert upward pressure on wages. It should be a workers’ market. But wages remain flat, and companies have used their latest bounty for stock buybacks, a transparent form of market manipulation that was illegal until the Reagan-era SEC began to chip away at the edifice of New Deal market reforms.

The power of labor continues to wane; the Supreme Court’s Janus v. AFSCME decision, while ostensibly limited to public sector unions, signaled in certain terms the willingness of the court’s conservative majority—five guys who have never held a real job—to effectively overturn the entire National Labor Relations Act if given the opportunity. The justices, who imagine working at Wendy’s is like getting hired as an associate at Hogan & Hartson after a couple of federal clerkships, reason that every employee can simply negotiate for the best possible deal with every employer.

US junk-bond issuance in June plunged 31% from a year ago to just $14.5 billion, the lowest of any June in five years, according to LCD of S&P Global Market Intelligence. During the first half of the year, junk bond issuance dropped 23% from a year ago to $110.6 billion. Is investor appetite for risky debt drying up? Have investors given up chasing yield? On the contrary! They’re chasing harder than before, but they’re chasing elsewhere in the junk-rated credit spectrum: leveraged loans. Leveraged loans are another way by which junk-rated companies can raise money. These loans are arranged by banks and sold either as loans or as Collateralized Loan Obligation (CLOs) to other investors, such as pension funds or loan funds.

They’re a $1 trillion market and trade like securities. But the SEC, which regulates securities, considers them loans and doesn’t regulate them. No one regulates them. In the first half, companies issued $274 billion of non-amortizing leveraged loans, and $97 billion in revolving and amortizing leveraged loans, according to LCD, for a total of $371 billion, on par with the record set in the first half last year. This is well over triple the amount of junk bonds issued in same period ($110 billion). Many of these loans have floating interest rates, typically pegged to the dollar-Libor. And in an investment environment where the Fed has been trying to push up interest rates, Libor has surged, and floating-rate loans, whose interest payments increase as Libor ratchets higher, are very appealing to investors – despite the additional risks these higher interest payments pose for the companies that are already struggling with negative cash flows.

[..] Leveraged loans come with covenants that are supposed to protect investors during the term of the loan and in case of default. With strong covenants and good collateral, leveraged loans tend to be less risky than junk bonds issued by the same company. Alas, investors have the hots for this debt, and companies are taking advantage of it by weakening covenants, giving investors fewer protections and the company more leeway – such as paying interest with more debt rather than cash if it runs out of cash (payment-in-kind or PIK); normally, not being able to pay interest would constitute a default, but not with these “covenant lite” or “cov-lite” loans. The boom in cov-lite has started years ago and has surged to massive record proportions. When these loans default, investors are exposed to much greater losses.

UK house prices should be frozen for five years to help prevent another financial crisis, the think tank IPPR has said. The group has urged the Bank of England to freeze property prices under a separate new inflation target and said this could lead to house prices falling by around 10 per cent in real terms as other prices and wages continue to rise, making homes more affordable. Under the IPPR’s proposals, house prices would be allowed to increase “only after expectations of constantly rising house prices have been ‘reset’”. The think tank also said prices would be allowed to grow “no faster than the general consumer price inflation target of 2 per cent, meaning no further growth in the real value of people’s homes”.

The IPPR said its recommendations were part of a wider plan to “rebalance the UK economy away from finance” so as to avoid another financial crisis. According to the IPPR, the financial sector’s “dominance” since the 1980s has contributed to a strong pound, which has hurt exporters, and has attracted surplus money from other countries, which has been channelled into loans for speculative investors, including mortgage lending. This speculation over house prices, the think tank said, has helped drive up prices and at the same time made the economy more vulnerable to a crisis, because it has reduced funds available for more productive investment, created regional inequalities with disproportionate growth in London and the South East, and “concentrated market power into the hands of a small number of large banks”.

[..] Grace Blakeley, IPPR research fellow, said: “Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into debt for UK consumers. The 2008 crisis proved that this is unsustainable. “We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation. To do this, we must break the cycle of ever-rising house prices driving property speculation, crowding out investment in the real economy.”

Theresa May is clinging on to power following the dramatic resignation of Boris Johnson and a bruising 24 hours of conflict with Tory Brexiteers. Mr Johnson became the third minister to quit in the space of a day, accusing Ms May of pursuing a Brexit that would lock Britain into “the status of colony”. In a scathing letter, he said her plans for negotiating with Europe decided at Chequers last week equated to going into battle with “white flags fluttering”. But despite the resignations and the looming threat of a “vote of no confidence”, Ms May survived the day and finished it with a swipe at Mr Johnson, in which she appeared to question his motives for quitting.

After David Davis left his job as Brexit secretary just before midnight on Sunday, speculation grew as to whether there would be a slew of resignations, bringing down the government. He had been followed by fellow Brexit minister Steve Baker, but it was not until 3pm on Monday, when it emerged that Mr Johnson was walking, that Ms May looked at her most precarious. It was claimed that Downing Street leaked news of his resignation before he could write his letter, which the prime minister’ aides guessed would be wounding. When it came it said: “Brexit should be about opportunity and hope. It should be a chance to do things differently, to be more nimble and dynamic, and to maximise the particular advantages of the UK as an open, outward looking global economy. “The dream is dying, suffocated by needles doubt.”

“Instead of the Star Trek vision of boldly going where no imperial nostalgic society had gone before, this Brexit would not have enough thrust to get the UK out of the gravitational pull of the European Union”

The best headline about British prime minister Theresa May’s short-lived triumph over the hard Brexiteers last Friday was undoubtedly the one on Pádraig Collins’s report in the Guardian: “Possum rescued after getting head stuck in Nutella jar”. Admittedly, Collins was actually reporting, not from Chequers, but from Brisbane, Australia. Yet the accompanying photograph was the perfect image of what May is trying to do. It showed the furry creature all curled up and immobilised with its head completely encased in a glass jar streaked with visible residues of sticky brown stuff. As a spokesman for the Australian RSPCA explained, the dumb animal “managed to get his head in the jar, but obviously couldn’t get it out”.

The rescuer put “towels around the possum so she could get him out of the jar without getting scratched by his claws”. The story saves me the trouble of thinking up a metaphor. The Brexiteers have their heads stuck in a jar of sticky brown stuff that seemed so sweet and enticing. May’s compromise deal and the White Paper she is still expected to publish this week are the towels wrapped round the Brexiteers’ claws so that their heads can be pulled out of the jar without her premiership getting scratched to death.

The only problem is that David Davis and Boris Johnson, having been successfully extracted, decided to bare their claws again. As any possum or two-year-old child will tell you, sticking your head inside a glass jar is quite a thrill. You get to see the world through a distorting lens that creates a comforting distance between you and reality. You can’t hear unwanted voices raising awkward questions. Brexit has so far been conducted through a glass darkly. It has been seen through glorious fantasies of imperial revival and layers of self-pity about imaginary oppression. What May has been attempting, very late in the day, is to force her more deluded colleagues to get their heads out of the jar and look directly at Brexit.

Britain’s counter-terrorism chief has said it is highly likely the novichok that killed Dawn Sturgess in Wiltshire came from the same batch used four months earlier to attack a former Russian spy and his daughter at their Salisbury home. The Metropolitan police assistant commissioner Neil Basu also said the substance that led to Sturgess and her partner Charlie Rowley falling ill on Saturday was in a vessel or container when the couple came across it. Police have opened a murder investigation after Sturgess died in hospital on Sunday at 8.26pm. Basu said: “It is both shocking and utterly appalling that a British citizen has died having being exposed to a Novichok nerve agent.

“But make no mistake, we’re determined to find out how Dawn and her partner, Charlie Rowley, came into contact with such a deadly substance; and we will do everything we possibly can to bring those responsible to justice.” Basu said Sturgess and Rowley got a high dose of novichok after handling a container containing the nerve agent. It was most likely that the container police are hunting for was linked to the attack four months earlier on the Skripals. [..] “In the four months since the Skripals and Nick Bailey were poisoned, no other people besides Dawn and Charlie have presented with symptoms. Their reaction is so severe it resulted in Dawn’s death and Charlie being critically ill. This means they must have got a high dose. Our hypothesis is they must have handled the container we are now seeking.”

Nissan has said it has found evidence of misconduct relating to exhaust emissions and fuel economy measurements for 19 models sold in Japan. The Japanese carmaker said on Monday it had discovered the testing environments for emissions and fuel economy in final vehicle inspections at most of its factories in Japan were not in line with requirements, and inspection reports were based on altered measurements. “A full and comprehensive investigation of the facts … including the causes and background of the misconduct, is under way,” Nissan said. The problems were found during voluntary compliance checks following an improper vehicle inspection scandal last year.

In October, a recall of 1.2m vehicles was triggered after Nissan said uncertified inspectors had signed off on final checks for cars sold in Japan. The carmaker blamed staffing shortages for the scandal, which caused annual operating profit to slide. Nissan said the latest misconduct did not compromise the safety of the affected models, and mileage readings were in line with levels presented in product catalogues. It was in the process of compiling data for the GT-R sports car to confirm it satisfied safety standards. The carmaker said it would take appropriate action to prevent similar problems in future.

U.S. President Donald Trump on Monday took aim at Pfizer Inc and other U.S. drugmakers after they raised prices on some of their medicines on July 1, saying his administration would act in response. “Pfizer & others should be ashamed that they have raised drug prices for no reason.” Trump wrote in a post on Twitter on Monday. “We will respond!” Health and Human Services Secretary Alex Azar followed up with his own tweet saying that drugmakers who have raised prices have created a tipping point in U.S. drug pricing policy. “Change is coming to drug pricing, whether painful or not for pharmaceutical companies,” Azar wrote. Neither Trump nor Azar detailed what policy changes would be implemented to decrease prices.

Trump had said in May that some drug companies would soon announce “voluntary, massive” cuts in prices, but none have materialized yet. During his presidential campaign, he promised lower U.S. drug costs. Pfizer raised list prices on around 40 medicines earlier this month. Those include Viagra, cholesterol drug Lipitor and arthritis treatment Xeljanz, according to Wells Fargo. List prices do not include rebates and discounts drugmakers may offer. “The list price remains unchanged for the majority of our medicines. Our portfolio includes more than 400 medicines and vaccines. We are modifying prices for approximately 10 percent of these, including some instances where we’re decreasing the price,” Pfizer spokeswoman Sally Beatty told Reuters.

A U.S. federal judge on Monday rejected the Trump administration’s request to allow long-term detention of illegal immigrant children, a legal setback for President Donald Trump’s push to detain immigrant families taken into custody at the U.S.-Mexico border. Los Angeles U.S. District Court Judge Dolly Gee dismissed as “dubious” and “unconvincing” the U.S. Justice Department’s proposal to modify a 1997 settlement known as the Flores Agreement, which says that children cannot be held in detention for long periods. The government made its request in June after public outcry over its policy of separating children from parents who entered the United States illegally.

A judge in a different case in San Diego ordered the government last month to reunite the families it had separated. The government asserted in its Flores filing that the San Diego ruling would necessitate longer-term detention of children, since that would be the only way to both reunite them with their parents and keep the parents incarcerated during their immigration proceedings. Gee rejected that argument. “Defendants advance a tortured interpretation of the Flores Agreement in an attempt to show that the … injunction permits them to suspend the Flores release and licensure provisions,” she wrote.

Egypt’s opposition to establishing camps for screening migrants heading to Europe has made the European Union’s “regional disembarkation centres” proposal seem even more implausible. Cairo’s stand has underscored the deep worries in the Egyptian administration about the country’s increasing refugee responsibilities, analysts said. “This is a burden Egypt shoulders alone, without any support from the international community,” said MP Ghada Agamy, a member of the Egyptian parliament’s Foreign Relations Committee.

Egypt said it would not be able to accommodate “regional disembarkation centres” for migrants trying to cross the Mediterranean to Europe just hours after European leaders reached a controversial migration deal that included refugee centres in North Africa and “controlled centres” in European countries. Egypt, Tunisia, Morocco and Algeria have rejected the idea of regional disembarkation centres. The Egyptian government said establishing refugee camps would violate the Egyptian constitution. Refugees, Egyptian parliament Speaker Ali Abdel A’al said, can live wherever they want in Egypt. “We do not establish camps here,” he said. Egyptian officials are concerned about Cairo’s ability to shoulder refugee-related burdens, analysts said, particularly at a time of economic transition.

[..] Instead of asking economically struggling countries to act as refugee hosts, European leaders need to solve the problems that cause these refugees to leave their countries in the first place, particularly the unrest that has engulfed many countries, Egyptian specialists said. “The solution to the problem will be to resettle these refugees in their countries,” said Youssef al-Metany, a refugee lawyer at local NGO Egyptian Network for International Law. “This can only happen when the conflicts raging in these countries are settled.”

Last week was the third anniversary of the 2015 referendum, in which the Greek people voted no to more austerity, and no to the violation of democracy by the creditors. The week before Alexis Tsipras, the prime minister who betrayed the brave no of the Greek people, visited London to present his capitulation to the troika of the European commission, the International Monetary Fund and the European Central Bank as an achievement.

Imagine how the British people would view a prime minister elected to end privatisation, and who instead privatised almost every piece of public property; who was elected to serve peace, and who instead facilitated military action against targets in Syria and agreed to sell weapons to countries accused of committing international crimes; who was elected to protect people’s homes, and who stood by while banks seized them, leaving people homeless; who was elected to serve democracy and the independence of his country, and who instead turned it over to the EU, the IMF and the ECB. This is what Tsipras did to the Greek people.

I was a Syriza MP and president of the Greek parliament during the seven months of the first Syriza government. When Tsipras signed the toxic third memorandum in 2015, I fought hard to protect our parliamentary procedures that he and the troika violated. In spite of continuous pressure, I refused to bend our democratic rules and accept more illegal debt for our people. Together with dozens of other Syriza MPs, I voted against the monstrous agreement. Tsipras then dissolved parliament prematurely to get rid of me and the dissenting MPs.

Three years on, his capitulation to the troika has proved the disaster many of us predicted. People’s lives have become unbearable. Youth unemployment has become the norm and an estimated 8% of the population has left in search of work. The minimum salary doesn’t pay the bills, and hundreds of thousands of families go without electricity for extended periods of time. This tragedy began in 2010, but Tsipras’s so-called left government has done everything to prove that it can implement austerity better than its predecessors. It even brags about exceeding the troika’s cruel targets in cuts and taxes.

I suppose many who think about the prospect of economic collapse imagine something like a Death Star implosion that simply obliterates the normal doings of daily life overnight, leaving everybody in a short, nasty, brutish, Hobbesian free-for-all that dumps the survivors in a replay of the Stone Age — without the consolation of golden ages yet to come that we had the first time around. The collapse of our techno-industrial set-up has actually been going on for some time, insidiously and corrosively, without shattering the scaffolds of seeming normality, just stealthily undermining them. I’d date the onset of it to about 2005 when the world unknowingly crossed an invisible border into the terra incognito of peak oil, by which, of course, I mean oil that societies could no longer afford to pull out of the ground.

It’s one thing to have an abundance of really cheap energy, like oil was in 1955. But when the supply starts to get sketchy, and what’s left can only be obtained at an economic loss, the system goes quietly insane. In the event, popular beliefs and behavior have turned really strange. We do things that are patently self-destructive, rationalize them with doctrines and policies that don’t add up, and then garnish them with wishful fantasies that offer hypothetical happy endings to plot lines that do not really tend in a rosy direction. The techno-narcissistic nonsense reverberating through the echo-chambers of business, media, and government aims to furnish that nostrum called “hope” to a nation that simply won’t admit darker outcomes to the terrible limits facing humanity.

Thus, we have the Tesla saga of electric motoring to save the day for our vaunted way of life (i.e. the landscape as demolition derby), the absurd proposals to colonize distant, arid, frigid, and airless Mars as a cure for ruining this watery blue planet ideally suited for our life-form, and the inane “singularity” narratives that propose to replace grubby material human life with a crypto-gnostic data cloud of never-ending cosmic orgasm. The psychological desperation is obvious. Apparently, there are moments in history when flying up your own butt-hole is the most comforting available option.

A lawyer for a California groundskeeper dying of cancer took aim at Monsanto Monday as a jury began hearing the lawsuit accusing the chemical giant of ignoring health risks of its top-selling weed killer Roundup. “For the past 40 years, Monsanto has known the primary ingredient in Roundup can produce tumors in lab animals,” attorney Brent Wisner told a California state court. A jury is hearing the case brought by Dewayne Johnson, a 46-year-old father of two. Diagnosed in 2014 with non-Hodgkin’s lymphoma, a cancer that affects white blood cells, Johnson used a Monsanto generic version of Roundup called “Ranger Pro” repeatedly in his job at a school in Benicia, California, after being promoted to groundskeeper in 2012.

In his opening statement, Wisner said Monsanto opted against warning consumers of the risks and that instead “they have fought science” by playing down the suspected link between the chemical herbicide and cancer. “Monsanto has gone out of its way to bully scientists and fight researchers,” he told the jury. The case in California Superior Court is the first trial in which Roundup is said to have caused cancer, a claim repeatedly denied by the chemical company. If Monsanto loses, the case could open the door to hundreds of additional lawsuits against the company recently acquired by German-based pharmaceutical and chemical group Bayer.

Johnson had little warning about the risks of Roundup, his lawyer said. “He was told you could drink it, it was completely non toxic,” Wisner said with his client sitting in the San Francisco courtroom. “You will hear testimony from him that he got drenched in it, repeatedly.” The lawyer said Johnson, who is between rounds of chemotherapy, “is actually on borrowed time, he is not supposed to be alive today.” A key to Johnson’s case will be convincing jurors that Monsanto’s pesticide — whose main ingredient is glyphosate — is responsible for the illness. Wisner contended glyphosate combined with an ingredient intended to help it spread over leaves in a cancer-causing “synergy.”

Rembrandt van Rijn Christ In The Storm On The Sea Of Galilee 1633
Stolen from Gardner Museum March 18 1990, single largest art theft in the world. Never recovered

I am gullible. Very. I betcha I am more gullible than you. And that tells you something, because you know how gullible you are. Or so you think. Still, as bad as I got it, something physically snapped in the back of my head this morning, I could hear it snap, when I saw this Guardian headline:

Detectives investigating the attempted murders of Russian double agent Sergei Skripal and his daughter Yulia Skripal have said they believe the pair were poisoned with a nerve agent at the front door of his Salisbury home. Specialists investigating the poisoning of the the Skripals have found the highest concentration of the nerve agent on the front door at the address, police said. Counter-terrorism detectives will continue to focus their inquiries on the home address for the coming weeks, and possibly months…

See, because of my gullibility, I’ve decided that if I’m to have any idea of what really goes on around me, I’m condemned to reading a lot. Obviously, like you, I’ve found that the vast majority of what passes for news is as fake as it gets. More so by the day. So we have to read between the lines all the time. It’s what it is. But this…

If these two people have actually been poisoned, that’s a really terrible thing. But maybe lying about such things is much worse. And I doubt that anything at all we’ve been told about the Skripal case is true. Not because I don’t want to believe it, but because the storytellers plant so many trees they’re getting lost in their own forest.

Today the British press reports that the Skripal father and daughter pair were poisoned “from their front door”. They do that with the same level of certainty that just a few days ago they used in telling us they were poisoned through the air vents of the dad’s BMW. Exact same story, just a different location. And that’s after a by now long sequence of headlines that claimed it had happened inside the home, or in a bar, a pizzeria, or on the parkbench they were ostensibly ‘found’ on.

What that headline above, and all others on the topic that came before it, tells me is that evidently the hundreds of ‘experts’ involved in the case have not yet been able to locate the ‘nerve agent’. They’re still just guessing, even 25 days after the incident is supposed to have happened. How would that be done? I have no idea, but I’m surely thinking that after almost 4 weeks it’s essentially a pure guessing game, and nothing more than that.

Does the alleged nerve agent leave traces after all that time? I don’t have a clue, but I do know from what I’ve read that it’s apparently so toxic (as in lethal) that even very faint traces of the stuff are, well, lethal. So when I first read the BMW air vent theory last week I was thinking: did the guy who towed that car to the police station wear a full hazmat suit? He would have had to if he’s still alive.

And where is that car anyway? Come to think of it, where are the Skripals? And how is it possible that they survived the ‘attack’? Were they given a full blood transfusion? Are they being treated 24/7 by dedicated personnel in hazmat suits? There are too many questions for me to answer. And that goes for you too. And for Boris Johnson. And Donald Trump. And the governments of the 30-or-so nations that nevertheless expelled well over a hundred Russian diplomats.

Now, I’m not a chemist, let alone an organic chemist. So perhaps I should consult with my friend Dave Collum, who is. But I was going to write this from memory, not go back and find all those headlines, or ask around. This is not about me being 100% correct, it’s about the ‘news reports’ being so far off the truth.

Here’s what I have picked up about the nerve agent. The press calls it “Novichok“ (Russian for newbies), but Novichok is not a nerve agent, it’s a group of them. In the Skripal case, the journalists -who I can only hope are not as gullible as I am- behind all the ‘news’ have been told by ‘authorities’ that we’re dealing with A-234, which is a novichok nerve agent.

Developed by Russia a long time ago, but no longer produced in Russia after 1993, as the 2013 Nobel Peace Prize winning Organisation for the Prohibition of Chemical Weapons (OPCW) has confirmed. Its chemical formula has been made public, which means that at least in theory anyone could produce it.

Russia would seem to be the last country to try that, because it would point straight to them. And they haven’t stood still for 25 years, they can make Novichok 2.0 if they want. Not that they appear to have much if any reason to poison the Skripals, there are quite a few parties that have at least as much incentive to do that.

Wait, before I forget, there was a policeman who allegedly ‘treated’ the Skripals first, and was himself ‘poisoned’ in the act and hospitalized, but was released a few days ago. What exactly happened to him? How did the A-234 not kill him? Did he receive such a faint trace that he was ‘cleaned’ within days? Where is he now? Why has he not released any statement? Doesn’t he strike you, too, as being a little bit pregnant?

But, again, I’m not a chemist. Collum, who I can’t really claim as a friend anymore, because he’s everybody’s friend these days, tweets a hint:

Hey organic chemists: the Novichuk nerve agents are like those below. [..] You could just use the racemate with plenty of effect. Unlike drugs, the goal here is to kill the recipient.

From what I understand, A-234, like all novichoks, is just a pesticide with a fancy dress on. Not terribly unique or special, and not terribly Russian after 25 years either. Just terribly lethal. Which by the way is saying something about how we produce our food, too. Can we blame Putin for losing our insects as well, please? It’s so much easier that way.

But I digress. As I started out saying, it’s the ‘news’ that yet another ‘location’ for the ‘nerve agent’ had been discovered after 25 days and hundreds of specialists, at the bleeping front door of the ‘victims’ home, as if nobody ever thought of looking there, that snapped that thingy in my head. Location, location, location.

Still, when I venture beyond what can be or has been proven, which is about as near to zero Kelvin as I even want to think about, there was this other thing this morning. Julian Assange has been cut off from the internet by his gracious Ecuadorian hosts in their London embassy. And I betcha that’s because he dared question Britain in the Skripal case, on Twitter.

Here’s my theory, borne off my gullibility in all its glory: Theresa May and her government have been stumbling from disaster to catastrophe over the Brexit calamity for months now, and they needed some relief. But they themselves are not smart enough to provide it. So someone got it for them.

They’re keeping Labour boss Jeremy Corbyn occupied for all he’s worth with a cocked-up narrative of him being an antisemite. Stupid as can be story, but it works for as long as they need it to. The other day the BBC photoshopped a Russian hat on Corbyn’s face; that stuck less than the Jew-hater tale, so they went with that one. Some UK parliamentary fake news committee wants to talk to Zuckerberg, but they should look closer to home. If fake news is what they’re really after.

So anyway, they all went with the Novichok concocted thing, and boy did that ever catch on. Even every western politicians’ pet hamsters have now sent their Russian caregivers packing. And you know what it is, even if May and Boris had any proof of Russian involvement, all those countries certainly do not. Even if they had the evidence, they’re not going to send it around to dozens of countries. Just not.

Boris Johnson couldn’t resist comparing Putin to Hitler. You can’t fall any lower than that. Or can you? The diplomats were all expelled on a day that Russia was lamenting the death of 64(?) victims (mostly children) in a shopping mall fire, in what they declared a day of national mourning. You think Boris sent his condolences?

I can write about this all day long, and weekends too. You know, Crimea, Ukraine, MH17, the new cold war narrative has been well prepared. And now John Bolton, who may well be the deadliest cartoon character we’ve ever seen -let alone imagined-, is all set to score the easy tip-in. But that is possible only because all of you are as gullible as I am. Don’t forget that. They’re blinding you with silence, with stupidity, with your own lack of neuron activity.

Even if this is a story with too many holes in it to qualify as Swiss cheese. The story doesn’t make any sense? Who cares, really, all the front pages shout it out in bold print. And if you get tired of it: where’s the remote, Mildred?

British politician and former candidate for mayor of London, George Galloway, on Twitter, says it so much better than I ever could, and shorter too, which is why I quote him at the end of this article:

Why do I not believe you? Let me count the ways. You’re not looking for anyone in connection with the attack on the Skripals. There is no manhunt, no all points alert, no description, no identikit drawing, no CCTV. No suspects. That means you already know what happened. #Russia

We know Facebook is trying to screw with your brains. Well, they’re not the only ones. Your government -and ‘intelligence’ services- want the monopoly on that, too.

I can not make this a definitive, or final, or complete story. Because nobody can. But I can tell you this: if you think that Russia or God forbid Putin, ‘poisoned’ the Skripals, you’re so wrong you’re beyond salvation. Not because it may or may not be true, but because you have seen no evidence. And you still go with it. Where’s the remote, Mildred?

Facebook and that worked with Donald Trump’s election team have come under mounting pressure, with calls for investigations and hearings to explain a vast data breach that affected tens of millions of people. In Britain, the head of the parliamentary committee investigating fake news accused Cambridge Analytica and Facebook of misleading MPs after revelations in the Observer that more than 50m Facebook profiles were harvested and used to build a system that may have influenced voters in the 2016 presidential campaign. The Conservative MP Damian Collins said he would call the heads of both companies, Alexander Nix and Mark Zuckerberg, to give further testimony.

His intervention came after a whistleblower spoke to the Observer and described how the profiles, mostly of US voters, were harvested for Cambridge Analytica, in one of Facebook’s biggest ever data breaches. The disclosures caused outrage on both sides of the Atlantic; in the US, a state attorney general has called for investigations and greater accountability and regulation. There have been reports that Cambridge Analytica is trying to stop the broadcast of a Channel 4 News exposé in which Nix is said to talk unguardedly about the company’s practices. According to the Financial Times, reporters posed as prospective clients and secretly filmed a series of meetings, including one with the chief executive. The report is due to air this week.

Very little credibility so far. From descriptions of the nerve agent, it would seem impossible that “..at least 38 people in Salisbury had been identified as having been affected by it..” and all lived to tell it. Is the whole Novichok story a fabrication? Know what, Boris? Why not show the proof you claim to have?!

Boris Johnson will today seek to convince the EU foreign affairs council to join him in fresh condemnation of Russia after his explosive claims that Moscow has been creating and stockpiling nerve agent novichok and working out how to use it for assassinations. Scientists from the UN-backed Organisation for the Prohibition of Chemical Weapons arrive today to analyse samples of the agent used to poison the former spy Sergei Skripal and his daughter Yulia. The foreign secretary made his claims after Russian EU ambassador Vladimir Chizhov issued blanket denials and said British agents might have used their stockpiles at Porton Down.

As the row enters its third week, Johnson dismissed Chizhov’s comments, saying they were “not the response of a country that really believes it’s innocent”. On Sunday, Vladimir Putin, fresh from a profoundly unsurprising electoral victory, denied any such nerve agents existed and said the idea of carrying out such a killing during an election campaign would be “rubbish, drivel, nonsense”. The latest theory to gain prominence is that the Skripals were poisoned via his car’s ventilation system. The report, from ABC news in the US, came as counter-terrorism police renewed their appeal for sightings of Skripal’s burgundy BMW 320D saloon car on 4 March. ABC also reported that at least 38 people in Salisbury had been identified as having been affected by the nerve agent.

U.S. corporate debt levels stand above crisis highs even as default rates among the most leveraged firms remain subdued. With an economy hitting its stride, it’s perhaps no surprise that the high-yield bond market is placid. The extent of the divergence between debt levels and defaults, however, is worrying to some analysts who feel rising corporate indebtedness will eventually catch out unwary investors and deflate the junk-bond market. But beyond complacency John Lonski at Moody’s Capital Market Research, argued that globalization and the tendency of U.S. businesses to hoard cash as reasons why corporate debt levels may no longer move in sync with default rates and credit spreads.

The high-yield default rate in the fourth-quarter of 2017 fell to 3.3%, even as U.S. nonfinancial-corporate debt ended in 2017 at 45.4% of GDP. This compares with a much higher default rate of 11.1% in the second quarter of 2009, with corporate debt levels at 45% of GDP. Granted, the current levels come with the economy in the eighth year of an expansion, while the second quarter of 2009 marked the final quarter of the longest and deepest U.S. recession since the Great Depression. The yield spread between high-yield bonds and safe government paper, as represented by the 10-year Treasury note narrowed to an average 3.63 percentage points in the fourth quarter of 2017, from an average 12.02 percentage points in the second quarter of 2009.

The tight credit spreads reflects that borrowing costs are still close to historic lows, and that investors are demanding minimum compensation for holding arguably the riskiest debt in the bond market. One answer “might be supplied by the ever increasing globalization of U.S. businesses where the more relevant denominator is not U.S. GDP, but world GDP” said Lonski. The fortunes of U.S. companies are now wove into the broader global economy. When commodity prices took a hit in 2015 and early 2016, crimping growth in China and other emerging markets, high-yield bonds were also slammed.

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that the Fed could never unload the securities it had acquired during QE. How things have changed! On Friday, the three-month Treasury yield closed at 1.78%, the highest since August 19, 2008. When yields rise, by definition bond prices fall:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that The Fed’s target range for the federal funds rate has been 1.25% to 1.50% since its last rate hike at the December FOMC meeting. In other words, the three-month yield is already above the upper limit of the Fed’s target range after the next rate hike. So the market has fully priced in a rate hike at the FOMC meeting ending March 21. And it’s also starting to price in another rate hike in June. In this rate-hike cycle, the Fed has engaged in policy action only at meetings that are followed by a press conference.

There are four of these press-conference meetings per year. The next two are this week and June. If, in this cycle, the Fed hike rates at an FOMC meeting that is not followed by a press conference – there are also four of them this year – it would be considered a “monetary shock” that the Fed decided to administer to the markets. It would be like a rate hike of 50 basis points instead of the expected 25 basis points. There would be a hue and cry in the markets around the world. But I think the Fed isn’t ready to spring that on the markets just yet. Maybe later. The two-year yield rose to 2.31% on Friday, the highest since August 29, 2008:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that In past rate hike cycles, the two-year yield reacted faster to rate-hike expectations than the 10-year yield. This is happening now as well. The 10-year yield has its own dynamics that are not in lockstep with the Fed’s rate-hike scenario. On Friday, the 10-year yield closed at 2.85%, within the same range where it had been since late February, tantalizingly close to 3%:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that [..] After the surge of the two-year yield, the difference between the two-year and the 10-year yield – the “two-10 spread” – has narrowed again. On Friday, it was at 54 basis points. In the chart below, note the narrowing at the end of last year to 50 basis points, then the mini-spike, as the 10-year yield surged faster than the two-year yield, and the recent fallback:

Despite a low unemployment rate and increasing wage growth, Americans still aren’t saving much. That’s according to a new survey from Bankrate.com, which found that 20% of Americans don’t save any of their annual income at all and even those who do save aren’t putting away a lot. Only 16% of survey respondents say that they save more than 15% of what they make, which is what experts generally recommend. A quarter of respondents report saving between 6 and 10% of their income and 21% say they sock away 5% or less.

At this rate, many people could be setting themselves up to fall short in retirement, Bankrate warns. “With a steady, significant share of the working population saving nothing or relatively little, it’s virtually guaranteed that they’ll be unable to afford a modest emergency expense or finance retirement,” says Mark Hamrick, senior economic analyst at Bankrate. “That amounts to a financial fail.” The economy might be prospering now, but that won’t last forever: “The party has to stop sometime, and when it does, employers will lay off workers,” the study says. In fact, Bankrate estimates that half of the American population won’t be able to maintain their standard of living once they stop working.

A report from GoBankingRates found similar results: Over 40% of Americans have less than $10,000 saved for when they retire. What’s keeping Americans from saving? “Expenses” was the No. 1 answer of 39% of respondents. Another 16% say they don’t have a “good enough job” to be able to save, which presumably means they aren’t earning enough. “The average American has less than $5,000 in a financial account, a quarter to a fifth of what you should have, and those aged 55 to 64 who have retirement savings only carry $120,000 — which won’t last long in the absence of paychecks,” the survey reports.

The expected rise in US interest rates will increase financial pressures on developing countries already struggling with a 60% jump in their debt repayments since 2014, a leading charity has warned. The Jubilee Debt Campaign said a study of 126 developing nations showed that they were devoting more than 10% of their revenues on average to paying the interest on money borrowed – the highest level since before the G7 agreement to write off the debts of the world’s poorest nations at Gleneagles, Scotland, in 2005. Five of the countries on the charity’s list – Angola, Lebanon, Ghana, Chad and Bhutan – were spending more than a third of government revenues on servicing debts.

Developing country debt moved down the international agenda following the Gleneagles agreement in which the G7 industrial countries agreed to spend £30bn writing off the debts owed to the International Monetary Fund and the World Bank by the 18 poor countries. But developing country debt is now once again being closely monitored by the IMF, which says 30 of the 67 poor countries it assesses are in debt distress or at risk of being so. Lending to developing countries almost doubled between 2008 and 2014 as low interest rates in the west led to a search for higher-yielding investments. A boom in commodity prices meant many poor countries borrowed in anticipation of tax receipts that have not materialised.

But the Jubilee Debt Campaign said the boom–bust in commodity prices was only one factor behind rising debt, pointing out that some countries were paying back money owed by former dictators, while others had been struggling with high debts for many years but had not been eligible for help. The campaign said developing countries were also vulnerable to a rise in global interest rates as central banks withdrew the support they have been providing since 2008. [..] The US Federal Reserve is expected to raise interest rates this week – with the financial markets expecting two or three further upward moves during 2018.

Tim Jones, an economist at the Jubilee Debt Campaign, said: “Debt payments for many countries have risen rapidly as a result of a lending boom and fall in commodity prices. The situation may worsen further as US dollar interest rates rise, and as other central banks reduce monetary stimulus. Debt payments are reducing government budgets when more spending is needed to meet the sustainable development goals.”

[..]The latest available data shows that Oman, for instance, has a debt equivalent to 31.4% of their GDP for 2016, which is up from 4.9% in 2014, according to TradingEconomics.com. That jump in debt coincided with a fall in oil prices from more than $100 a barrel in mid-2014 to a low of $26 in early 2016. Rising rates also tend to increase costs for businesses, says Rosso. And the higher costs of borrowing ultimately means that fewer businesses that request loans from banks will receive the money they need. In short, growth in the available credit in the economy will slow. If we learned nothing else from the financial crisis of 2008-2009, it is that the world of business runs on credit. Slower credit growth usually means slower economic growth.

The base case is that among the countries with the dollar peg such as Saudi Arabia, UAE and Oman, the increased interest rates will likely drag on growth for their economies. The timing is really pretty bad for some of the countries involved. For instance, the Saudi economy shrank by 0.43% in the quarter ending September 2017, according to TradingEconomics.com. The prior quarter was worse; the economy sank 1.03%. Two quarters of negative growth is generally seen as a recession. Will the impact of rising rates push Saudi’s economy back into another recession? It’s hard to tell so far, but there is a risk. Similar problems seem likely for some other countries in the dollar-peg group.

The latest data from Oman is awful as well, although not as recent as that on Saudi Arabia. That economy contracted 14.1% in 2015, followed by another 5.1% decline in 2016. Likewise, the UAE has seen its growth steadily decline in each of the five years through 2016 from 6.9% to 3% most recently. That would not be bad for economic growth, but it is going in the wrong direction.

South Korea’s foreign minister has said that North Korea’s leader has “given his word” that he is committed to denuclearization, a prime condition for a potential summit with President Donald Trump in May. Trump has agreed to what would be historic talks after South Korean officials relayed that Kim Jong-un was committed to ridding the Korean Peninsula of nuclear weapons and was willing to halt nuclear and missile tests. North Korea hasn’t publicly confirmed the summit plans, and a meeting place isn’t known. South Korea’s Kang Kyung-wha said Seoul has asked the North “to indicate in clear terms the commitment to denuclearization” and she says Kim’s “conveyed that commitment.” She told the CBS programme Face the Nation that “he’s given his word” and it’s “the first time that the words came directly” from the North’s leader.

U.S. President Donald Trump’s immediate willingness to meet Kim Jong Un for nuclear talks likely caught the North Korean leader by surprise, forcing him to consider his position before responding publicly, the South Korean foreign minister said. “We were all quite surprised by the readiness of that decision,” South Korea’s Kang Kyung-wha said on CBS’s “Face the Nation” Sunday. “It was an extremely courageous decision on the part of President Trump. We believe the North Korean leader is now taking stock.” Trump agreed to meet with Kim on March 8 after a briefing from South Korean officials.

The summit, expected to take place in a few months, would represent the first time a U.S. president has met a North Korean leader – either Kim or his father or grandfather – and is part of an overall strategy to dismantle that nation’s rapidly advancing nuclear weapons program. Pyongyang has already detonated what it described as a hydrogen bomb capable of riding an intercontinental ballistic missile to cities across the U.S., and Kim has threatened to use nuclear arms against Americans. The summit, if it occurs, will likely follow an already-scheduled meeting between Kim and South Korean President Moon Jae-in to take place in South Korea, at which denuclearization will also be discussed, Kang said.

Japan’s embattled prime minister has hit back at critics over a favouritism and cover-up scandal that has seen his popularity plunge and loosened his grip on power. In a statement in parliament, Shinzo Abe stressed he had not ordered bureaucrats to alter documents relating to a controversial land sale. “I have never ordered changes,” he said. The scandal surrounds the 2016 sale of state-owned land to a nationalist operator of schools who claims ties to Abe and his wife Akie. The sale was clinched at a price well below market value amid allegations that the high-level connections helped grease the deal. The affair first emerged early last year, but resurfaced after the revelation that official documents related to the sale had been changed.

Versions of the original and doctored documents made public by opposition lawmakers appeared to show passing references to Abe were scrubbed, along with several references to his wife Akie and Finance Minister Taro Aso. Aso has blamed the alterations on “some staff members” at the ministry. But Jiro Yamaguchi, a politics professor at Hosei University in Tokyo, said the public was “not at all convinced” by this explanation. “Why was the land sold at a discount price? Without any political pressure, this could never happen, and voters are angry about it,” said Yamaguchi. The prime minister repeated an apology, saying he “keenly felt” his responsibility over the scandal that has “shaken people’s confidence in government administration.”

The affair is hitting Abe’s ratings hard, with a new poll in the Asahi Shimbun showing public support nosediving by 13 percentage points from the previous month to 31%. The figure is the lowest approval rating for Abe in the poll since his return to power at the end of 2012.

Apple is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes, according to people familiar with the situation. The technology giant is making a significant investment in the development of next-generation MicroLED screens, say the people, who requested anonymity to discuss internal planning. MicroLED screens use different light-emitting compounds than the current OLED displays and promise to make future gadgets slimmer, brighter and less power-hungry. The screens are far more difficult to produce than OLED displays, and the company almost killed the project a year or so ago, the people say.

Engineers have since been making progress and the technology is now at an advanced stage, they say, though consumers will probably have to wait a few years before seeing the results. The ambitious undertaking is the latest example of Apple bringing the design of key components in-house. The company has designed chips powering its mobile devices for several years. Its move into displays has the long-term potential to hurt a range of suppliers, from screen makers like Samsung, Japan Display, Sharp and LG to companies like Synaptics that produce chip-screen interfaces. It may also hurt Universal Display, a leading developer of OLED technology. Display makers in Asia fell after Bloomberg News reported the plans. Japan Display dropped as much as 4.4%, Sharp tumbled as much as 3.3% and Samsung slid 1.4%.

Canadians’ collective household debt has climbed to $1.8 trillion as an international financial group sounds an early warning that the country’s banking system is at risk from rising debt levels. Equifax Canada says consumers now owe $1.821 trillion including mortgages as of the fourth-quarter of 2017, marking a 6% increase from a year earlier. Although nearly half of Canadians reduced their personal liabilities, roughly 37% added to their debt to push the average amount up 3.3% to $22,837 per person, not including mortgages.

The fresh numbers come as an international financial group owned by the world’s central banks says Canada’s credit-to-GDP and debt-service ratios show early warning signs of potential risk to the banking system in the coming years. The latest report by the Bank for International Settlements says Canada’s credit-to-GDP gap and debt-service ratios have surpassed critical thresholds and are signalling red, pointing to vulnerabilities. The group, however, cautions that these indicators should not be treated as a formal stress test, but as a first step in a broader analysis.

Germany should consider stepping up its border controls, German Interior Minister Horst Seehofer said on Sunday. “Not that many border points in Germany are permanently occupied,” Seehofer told German weekly newspaper Die Welt am Sonntag, adding: “We will now discuss whether that needs to change.” Seehofer also appealed for the suspension of the Schengen Agreement, which allows free movement within the EU bloc. “Internal border checks [between EU member states] must be in place so long as the EU fails to effectively control the external border,” he said, adding: “I don’t see it being able to do this in the near future.” The reintroduction of border controls is a prerogative of EU member states. Under EU rules they must remain an exception and respect the principle of proportionality.

Germany’s temporarily reintroduced border controls continue until May 12 and have been imposed on the land border with Austria and on flight connections from Greece because of the “security situation in Europe and threats resulting from the continuous secondary movements,” according to the European Commission. Seehofer’s comments follow EU demands in February that Germany and four other Schengen members – Austria, Denmark, Sweden and Norway – lift their border controls when the current agreed terms run out in May. [..] Seehofer is a member of the Christian Social Union (CSU), the Bavarian sister party of German Chancellor Angela Merkel’s conservative Christian Democrats (CDU).

More than 5 billion people could suffer water shortages by 2050 due to climate change, increased demand and polluted supplies, according to a UN report on the state of the world’s water. The comprehensive annual study warns of conflict and civilisational threats unless actions are taken to reduce the stress on rivers, lakes, aquifers, wetlands and reservoirs. The World Water Development Report – released in drought-hit Brasília – says positive change is possible, particularly in the key agricultural sector, but only if there is a move towards nature-based solutions that rely more on soil and trees than steel and concrete.

“For too long, the world has turned first to human-built, or ‘grey’, infrastructure to improve water management. In doing so, it has often brushed aside traditional and indigenous knowledge that embraces greener approaches,” says Gilbert Houngbo, the chair of UN Water, in the preface of the 100-page assessment. “In the face of accelerated consumption, increasing environmental degradation and the multi-faceted impacts of climate change, we clearly need new ways of manage competing demands on our freshwater resources.” Humans use about 4,600 cubic km of water every year, of which 70% goes to agriculture, 20% to industry and 10% to households, says the report, which was launched at the start of the triennial World Water Forum.

Global demand has increased sixfold over the past 100 years and continues to grow at the rate of 1% each year. This is already creating strains that will grow by 2050, when the world population is forecast to reach between 9.4 billion and 10.2 billion (up from 7.7 billion today), with two in every three people living in cities. [..] By 2050, the report predicts, between 4.8 billion and 5.7 billion people will live in areas that are water-scarce for at least one month each year, up from 3.6 billion today, while the number of people at risk of floods will increase to 1.6 billion, from 1.2 billion.

In recent days, the initial New Year optimism of many investors may have been jolted by fears of an economic slowdown resulting from interest-rate hikes. But no one should be surprised if the current sharp fall in equity prices is followed by a swift return to bullishness, at least in the short term. Despite the recent slide, the mood supporting stocks remains out of sync with the caution expressed by political leaders. Market participants could easily be forgiven for their early-year euphoria. After a solid 2017, key macroeconomic data – on unemployment, inflation, and consumer and business sentiment – as well as GDP forecasts all indicated that strong growth would continue in 2018. The result – in the United States and across most major economies – has been a rare moment of optimism in the context of the last decade.

For starters, the macro data are positively synchronized and inflation remains tame. Moreover, the IMF’s recent upward revision of global growth data came at precisely the point in the cycle when the economy should be showing signs of slowing. Moreover, stock markets’ record highs are no longer relying so much on loose monetary policy for support. Bullishness is underpinned by evidence of a notable uptick in capital investment. In the US, gross domestic private investment rose 5.1% year on year in the fourth quarter of 2017 and is nearly 90% higher than at the trough of the Great Recession, in the third quarter of 2009. This is emblematic of a deeper resurgence in corporate spending – as witnessed in durable goods orders. New orders for US manufactured durable goods beat expectations, climbing 2.9% month on month to December 2017 and 1.7% in November.

Other data tell a similar story. In 2017, the US Federal Reserve’s Industrial Production and Capacity Utilization index recorded its largest calendar year gain since 2010, increasing 3.6%. In addition, US President Donald Trump’s reiteration of his pledge to seek $1.5 trillion in spending on infrastructure and public capital programs will further bolster market sentiment. All of this bullishness will continue to stand in stark contrast to warnings by many world leaders. In just the last few weeks, German Chancellor Angela Merkel cautioned that the current international order is under threat. French President Emmanuel Macron noted that globalization is in the midst of a major crisis, and Canadian Prime Minister Justin Trudeau has stated that the unrest we see around the world is palpable and “isn’t going away.”

“Leveraged loans,” extended to junk-rated and highly leveraged companies, are too risky for banks to keep on their books. Banks sell them to loan mutual funds, or they slice-and-dice them into structured Collateralized Loan Obligations (CLOs) and sell them to institutional investors. This way, the banks get the rich fees but slough off the risk to investors, such as asset managers and pension funds. This has turned into a booming market. Issuance has soared. And given the pandemic chase for yield, the risk premium that investors are demanding to buy the highest rated “tranches” of these CLOs has dropped to the lowest since the Financial Crisis. Mass Mutual’s investment subsidiary, Barings, has packaged leveraged loans into a $517-million CLO that is sold in “tranches” of different risk levels.

[..] These floating-rate CLOs are attractive to asset managers in an environment of rising interest rates. If rates rise further, Libor rises in tandem, and investors would be protected against rising rates by the Libor-plus feature of the yields. Libor has surged in near-parallel with the US three-month Treasury yield and on Monday reached 1.83%. So the yield of Barings CLO was 2.82%. While the Libor-plus structure compensates investors for the risk of rising yields and inflation, it does not compensate investors for credit risk!

[..] One of the measures that track whether “financial conditions” are getting “easier” or tighter is the weekly St. Louis Fed Financial Stress Index. In this index, zero represents “normal.” A negative number indicates that financial conditions are easier than “normal”; a positive number indicates that they’re tighter than “normal.” The index, which is made up of 18 components – including six yield spreads, including one based on the 3-month Libor – had dropped to a historic low of -1.6 on November 3, 2017. Despite the Fed’s rate hikes and the accelerating QE Unwind, it has since ticked up only a smidgen and remains firmly in negative territory, at -1.35.

The Financial Stress Index and the two-year Treasury yield usually move roughly in parallel. But since July 2016, about the time the Fed stopped flip-flopping on rate hikes, the two-year yield began rising and more recently spiking, while the Financial Stress Index initially fell. The chart below shows this disconnect between the St. Louis Fed’s Financial Stress Index (red, left scale) and the two-year Treasury yield (black, right scale). Note the tiny rise of the red line over the past few weeks (circled in blue):

Investors actively abandoned the world’s biggest passive fund during the onset of market mayhem. The SPDR S&P 500 exchange-traded fund (ticker SPY) suffered a record $23.6 billion in outflows last week amid the worst momentum swing in history for the underlying U.S. equity benchmark. Outflows amounted to 8% of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010. A blowup in volatility-linked products sent markets haywire, eliciting waves of risk aversion from jittery investors. Strategists at JPMorgan said the swiftness and severity of the positioning unwind is a sign that further selling from the likes of commodity trading advisors and risk parity funds “should be limited from here.”

“The picture we are getting in the U.S. equity ETF space is one of advanced rather than early state de-risking,” they added. The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY’s assets. That’s nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015, when China’s surprise devaluation of the yuan roiled markets. Prior to this recent market tumult, extreme enthusiasm for U.S. equities had propelled the fund’s total assets above $300 billion.

Tomorrow’s VIX options expiration could prove extra volatile for the gauge. The Cboe Volatility Index tends to have bigger swings on days its contracts mature, with intraday moves of 13% on average on the past 12 monthly expirations. That compares with a mean daily fluctuation of 10% in the year through January. Of course, that was before this month, when a record VIX surge on Feb. 5 sent its average intraday move for February to almost 60%. What’s more, the recent market turmoil has led to a surge in the number of VIX contracts, and put open interest almost tripled to a record since the Jan. 17 expiration. Counting puts and calls, there are 15.4 million VIX options outstanding, and 40% of them mature tomorrow. While most stock-index options expire on the third Friday of every month, monthly VIX contracts expire two days earlier, on the Wednesday.

For European banks, it’s a headache that just won’t go away: the €944 billion ($1.17 trillion) of non-performing loans that’s weighing down their balance sheets. Economists say the pile of past-due and delinquent debt makes it harder for banks to lend more money, hurting their earnings. European authorities are prodding lenders to sell or wind down non-performing credit, but they’re split on how to tackle the issue, and some investors are disappointed by the pace of progress.

The problem is particularly acute in the countries that were hit hardest by the sovereign debt crisis. Greece, which has yet to exit its bailout program, tops the list of non-performing loans as a share of total credit, while Italy has the biggest pile of bad debt in absolute terms.

Italian banks have fixed goals for shrinking their bad credit levels by selling portfolios or winding down loans. Intesa Sanpaolo, the country’s biggest bank by market value, got a head start on its rivals two years ago and plans to accelerate the reduction of non-performing loans, Chief Executive Officer Carlo Messina said last month. He says other Italian banks “are doing the right job” and should make further progress this year.

Mario Draghi is facing yet another headache this year as a strong currency threatens to derail his quest to keep prices stable, with many analysts suggesting there’s no easy way out for the president of the ECB. Investors have been flocking to the single currency as the euro zone economy keeps growing and political risks dissipate. However, that could become a problem for the ECB as a stronger currency can mean that European-produced products become pricier and less attractive outside the region. The euro has risen nearly 3% against the U.S. dollar since the start of the year, at a time when the ECB has been assessing how to reduce its monetary stimulus – which aims to increase lending and stoke consumer prices. At the bank’s last press conference in January, Draghi admitted that recent volatility in the exchange rate was a “source of uncertainty.”

The ECB’s primary target has always been inflation and not the exchange rate and Draghi — like many central bankers around the world — has been cautious when speaking of his own currency. However, analysts believe that Draghi wouldn’t be able to talk down the euro, even if he wanted to. “I believe it will be difficult for the ECB to talk the euro down in a very significant manner as it has already pretty much exhausted its preferred expansionary monetary policy instruments which it could use to weaken the currency (rate hikes and QE),” Thu Lan Nguyen at Commerzbank told CNBC via email. “And as the G-20 nations have agreed that they will refrain from manipulating their exchange rates, interventions are not a viable option either. Or even directly talking the euro down for that matter, because other nations would see this as a violation of the agreement as well,” she said.

Greek bond yields continued to rise Tuesday, increasing worries about the cost of borrowing the country will face once it has to cover all of its financing needs through the market. At the same time Finance Minister Euclid Tsakalotos is adamant that Greece will not need a precautionary credit line and is embarking on a series of contacts in an attempt to attract investor interest. Tsakalotos departed on Tuesday for Paris for meetings with representatives of investment companies, hoping to convince them about the prospects of the Greek economy. He will continue his mission in London on Thursday. He is due back to Athens on Friday. The Greek 10-year bond saw its yield climb further on Tuesday, reaching 4.38% from 4.29% on Monday, while the yield on five-year paper advanced from 3.64% to 3.77% in a day. The 7-year debt yield exceeded 4%, having been sold to investors with a 3.5% yield just last Thursday.

Britons will spend almost a third more on their mortgages and other household debts over the next five years, according to new data, sparking fears many may struggle to cope with mounting costs if interest rates rise as predicted. The projection, revealed by a freedom of information request to the Office for Budget Responsibility, found household debt servicing costs were set to climb 29% by 2023, the vast majority of which are likely to be mortgages. The rise may take homeowners by surprise, given that costs fell 9% over the previous five years and also declined as a share of household income by almost a quarter due to historically low interest rates.

The Bank of England has indicated that it plans to raise interest rates from as early as May. On Monday the Resolution Foundation warned it could hit millions of low-income families who have relied on cheap credit. The Bank’s governor, Mark Carney, has said he believes the growing economy, including GDP growth and rising average wages, warrants a rise in interest rates from their low of 0.5%. Labour’s analysis found that an average household would see an increase of £468 in annual debt costs, from £1,983 in 2018 to £2,451 by 2023. The shadow chancellor, John McDonnell, called the figures “eye-watering increases in the potential costs faced by working families at a time when incomes are being squeezed”.

If you had $1 billion to spend on safe real estate assets, where would you look to buy? For many funds, financial institutions, and wealthy individuals, the perception is that the world’s financial centers are the places to be. After all, world-class cities like New York, London, and Hong Kong will never go out of style, and their extremely robust and high-density city centers limit the supply of quality assets to buy. But what happens when too many people pile into a “safe” asset? According to UBS, certain cities have seen prices rise at rates that are potentially not sustainable – and eight of these financial centers are at risk of having real estate bubbles that could eventually deflate.

Every year, UBS publishes the Global Real Estate Bubble Index, and the most recent edition shows several key markets in bubble territory. The bank highlights Toronto as the biggest potential bubble risk, noting that real prices have doubled over 13 years, while real rents and real income have only increased 5% and 10% respectively. However, the largest city in Canada was certainly not the only global financial center with real estate appreciating at rapid rates in the last year. In Munich, Toronto, Amsterdam, Sydney and Hong Kong, prices rose more than 10% in the last year alone. Annual increases at a 10% clip would lead to the doubling of prices every seven years, something the bank says is unsustainable.

In the last year, there were three key markets where prices did not rise: London, Milan, and Singapore. London is particularly notable, since it holds more millionaires than any other city in the world and is rated as the #1 financial center globally.

UK house price growth accelerated to 5.2% in the year to December, new official data shows. That was a rise from 5% in the twelve months to November. The jump exceeds rises in average wages, prompting experts to warn of a further strain on affordability. The average UK house price hit £227,000 in December 2017, up £1,000 from the previous month and £12,000 higher than in December 2016. The house price index compiled by the Office for National Statistics and the Land Registry shows Scotland and the South-west experienced the highest annual house price growth, registering 7.7% and 7.5% respectively.

Average prices in England rose 5% in the year, to £244,000 while Wales saw house prices increase by 5.4% over the last 12 months to stand at £154,000. Growth in Northern Ireland was slightly more subdued, with the average price rising 4.3% to £130,000. Richard Snook, a senior economist at PwC, said the overall UK rise was above his projection made at the start of 2017. [..] “In terms of regional trends, London prices showed a slight recovery from the sharp fall in November so the picture is one of a market that has plateaued since the summer. London prices are just 2.5% above their level a year ago.

The number of first-time buyers hit the highest level for a decade in 2017 while lending for buy-to-let has gone into retreat, according to official figures. A total of 365,000 buyers took ownership of their first home last year, an increase of 7.4% on 2016 and the highest number since 2006, said UK Finance, the trade body for Britain’s banks. Its data showed that the average first-time buyer was 30 and had an income of £41,000. Property experts said the government’s help-to-buy programme plus lower deposit and cheap mortgage deals propelled first-time buyers in 2017. But in a sign that the boom may be waning, the figures for December show the number slipped compared with the same month last year. The slowdown comes despite the stamp duty cut in the November budget, which is expected to save four out of five first-time buyers up to £5,000.

The raft of tax measures on buy-to-let introduced last year has sent the sector swiftly into retreat. There were 5,300 new buy-to-let house purchase mortgages completed in December, 17.2% fewer than in the same month a year earlier. Paul Smee, of UK Finance, said: “2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder. “But although the market remains competitive there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year. [..] Separate figures from the Office for National Statistics revealed that house price inflation in 2017 was 5.2%, taking the price of a typical UK home to £226,760.

Over the past year the rate of house price inflation has fallen while the number of first-time buyers has risen to its highest level since 2006. These two facts are connected: the reason young people have become renters rather than owner-occupiers is that property became expensive. Property has become so dear that the average first-time buyer is now 30 years old and has a salary of £41,000 a year. Owner-occupation rates have fallen from 70% to 63% over the past decade and it is not difficult to see why. Ultra-low interest rates mean that it has never been cheaper to service a mortgage, but that doesn’t matter all that much when the price of a home relative to incomes is so high.

For those who want to buy their own home, the good news is that house-price inflation will be modest in 2018. Earnings growth is still around 2.5%; the Bank of England is warning that interest rates are likely to go up faster and by more than previously expected; and tax changes that have helped cause a 17% annual drop in buy-to-let purchases in the year to December are going to become more stringent in April. House prices would already be falling were it not for the fact that interest rates and unemployment are low. It was the combination of 15% interest rates and a doubling of the jobless total that caused the property-price collapse of the early 1990s, and a repeat of that looks highly improbable because of a (welcome) lack of distressed sellers.

Boris Johnson will say he fears people are becoming “even more determined” in their efforts to stop Britain’s withdrawal from the European Union (EU), as he sets out in a major speech what allies claim is a liberal vision of Brexit. The Foreign Secretary’s Valentine’s Day address – entitled the Road to Brexit – will be the first in a series of set pieces from Cabinet ministers and preludes Theresa May’s address in Germany this weekend. At a central London location, Mr Johnson will say he fears that some are becoming “even more determined” to stop Brexit and “frustrate the will of the people”.

“I believe that would be a disastrous mistake that would lead to permanent and ineradicable feelings of betrayal,” Mr Johnson will say. “We cannot and will not let it happen.” “But if we are to carry this project through to national success – as we must – then we must reach out to those who still have anxieties. “I want to try today to anatomise at least some of those fears and to show to the best of my ability that they are unfounded, and that the very opposite is usually true: that Brexit is not grounds for fear but hope.”

There can be little doubt that the British, in general, have a sense of humor. And that’s perhaps the lens through which we should view the country these days. After all, what other options do we have? A comment yesterday to a Guardian article sums up the situation quite perfectly in just a few words (note: Dignitas has something to do with assisted dying):

Brexit is rapidly becoming like someone who booked a trip to Dignitas when they were told they were dying and has now been told there’s a cure. But they’re going to Switzerland anyway, because they can’t face dealing with Ryanair’s customer service team.

There are two main British political parties, Tories and Labour, which fight each other whenever and wherever they can. Moreover, each party has several camps that fight each other even more, if at all possible. The George W.- friendly Tony Blair Orchestra in the Labour Party seems to have lost out to the actually left-wing Jeremy Corbynistas for now, but they won’t give up without a fight (power is their only hobby). Blair is still commenting from the sidelines on Corbyn’s perceived follies while his faithful lament about how their Tone was misled by 43 into bombing Iraq.

The Tories have gone full-monty Monty Python. John Cleese et al must feel at least a pang of jealousy. 40 Tory MPs have allegedly gathered to demand for PM Theresa May to quit. A whole bunch of both Labour and Tory lawmakers threaten to tackle her over not allowing them a vote in any Brexit deal (which for now is entirely hypothetical). Other voices across party lines demand the resignation -or sacking- of foreign not-so-very-ministerial Boris Johnson.

One Tory MP, the Rt. Hon. John Redwood MP, who’s also Chief Global Strategist for Charles Stanley, wrote an op-ed in the FT telling investors to pull their money out of the UK. You can’t make that kind of stuff up. Or you can, but no-one would believe a word. The Python crew would have never made a dime if they had started out today, because life in Britain has now seriously trumped art. When the other guys are funnier without even trying, maybe comedy’s not your thing.

And that’s how we slide seamlessly right down into Theresa May and the Holy Grail, the probably best representation of what is going on. May never wanted a Brexit, but she’s so power hungry that she jumped at a chance of defending what she doesn’t believe in. By the way, apart maybe from Corbyn, all the actors in this comedy are in it not because they care for their country, but for themselves, exclusively. Brilliant video, by the way.

Not that Brexit is necessarily such a terrible thing. Putting distance between yourselves and the European Union may well be the most sensible thing there is. Because Brussels is now defined more than anything by what it has done -and failed to do- to Greece, to the refugees and to Catalonia. And it will never be able to shake that off. The EU, just like the UK, is ruled by people who care only about themselves. Our political systems self-select for sociopaths, with precious few exceptions.

Even if you see Brexit as a purely economical move, which most people do even though it’s very much not true, the British people should rejoice knowing that they won’t be the ones forking over for the next pan-European bank bailout. Then again, they’ll have to bail out their own banks. Which have grown way out of hand, the price paid for wanting to become a global finance center.

Nor will the British people be forced to pay up for the newly-revived, scary-as-hell and unholy idea of a European army, an idea that originated in the 1950s and has re-gained support the very moment Britain voted for Brexit:

France, Germany and 20 other EU governments are set to sign a defense pact on Monday they hope marks a new era of European military integration to cement unity after Britain’s decision to quit the bloc. In Europe’s latest attempt to lessen its reliance on the United States, the 22 governments will create a formal club that should give the European Union a more coherent role in tackling international crises.

“We’ve never come this far before,” said a senior EU official said of EU defense integration efforts that date back to a failed bid in the 1950s. “We are in a new situation.” The election of pro-European Emmanuel Macron as France’s president and warnings by U.S. President Donald Trump that European allies must pay more towards their security have propelled the project forward, diplomats said.

[..] A system to spot weaknesses across EU armed forces, in coordination with U.S.-led NATO, is due to start in a pilot stage, while a multi-billion-euro EU fund to support the pact is still under negotiation. Long blocked by Britain, which feared the creation of an EU army, defense integration was revived by France and Germany after Britons voted to leave the EU in June 2016.

[..] London is not part of the initiative but British officials have been pressing for third country involvement. Britain’s aerospace industry and its biggest defense firm BAE Systems fear losing out, diplomats said. Britain may be able to join in, but only on an exceptional basis if it provides substantial funds and expertise.

They don’t even know who’ll be the leader of this European Army. There are plenty of reasons this was voted down 60 years ago and left in the dustbin ever since. A German supreme commander, anyone? The female German minister of defence just yesterday let slip that she supports regime change in Poland. That’s all you should need to know.

This is presented in Brussels as a money saver. European countries have too many different weapons systems, is the reasoning, and need to become ‘more efficient’. I bet you right here and now that it will cost Europe an arm and an extra leg or two-three. But not Britain. Which can also, simultaneously, if and when sensible people are in office, ditch its grandiose notions of being an empire or world power, and cut its armed forces by 50 or 75%.

And while they’re at it, cut its arms industry into little pieces and flush them down the Thames. Brexit can be an opportunity, a chance for the country to fully re-invent itself. But first, the Python-styled tragic comedy starring Theresa and Boris will have to be played to its tragic finale. To that end, and since it just wouldn’t feel fair to leave him out, let’s make sure we reserve a role for George Orwell as well – it comes natural:

The tensions in Theresa May’s government intensified on Sunday night ahead of this week’s vital votes on the Brexit bill, as ministers accused Boris Johnson and Michael Gove of sending an “Orwellian” set of secret demands to No 10. As an increasingly weakened prime minister faces the possibility of parliamentary defeats on the bill, government colleagues have said they are aghast at the language used by the foreign secretary and the environment secretary in a joint private letter.

The leaked letter – a remarkable show of unity from two ministers who infamously fell out during last year’s leadership campaign – appeared to be designed to push May decisively towards a hard Brexit and limit the influence of former remainers. It complained of “insufficient energy” on Brexit in some parts of the government and insisted any transition period must end in June 2021 – a veiled attack on the chancellor, Philip Hammond.

A decision as big and defining as Brexit should always have been executed by a government, or a coalition, in which as broad a spectrum of the population as possible is represented. It’s crazy to let just one party push through their version, especially when views are so divergent and tensions run this high. The Tories have just a slight majority.

But really, all Labour have to do is wait until May and Boris and Gove and all the others run out of gas and their engine seizes. They lost two ministers in a week and more will follow. So Labour makes a peace offer, knowing full well it won’t be accepted, but has to be made just for form.

As per tomorrow, May’s EU Withdrawal Bill will be discussed in Parliament and the next episode of Theresa May and the Holy Grail can start. John Cleese will be watching, thinking every five minutes: “Why didn’t I think of that?”. The Bill will be ripped to shreds, between a Hard Brexit and a No Brexit side, and hundreds of amendments, and May will be ripped along with it.

Even her chances of lasting just the week are slim. She has to turn to Labour for support, but she can’t. If she does, Boris will smell his opportunity for the top post. He might even get it, but that would lead to something awfully close to civil war; still, maybe that’s inevitable anyway, and perhaps it would be a good thing. Cards on the table.

Keir Starmer, the party’s Brexit spokesman, wrote to May on Monday telling her there was a “sensible majority” in Parliament to secure a two-year transition deal for after Brexit. That would allow Britain to stay inside the European Union’s single market and customs union after 2019 while it completes trade talks with the bloc. He said the opposition to such an arrangement came from Conservatives.

“Over recent weeks, it has become increasingly clear that you alone do not have the authority to deliver a transitional deal with Europe and to take the necessary steps to protect jobs and the economy,” Starmer wrote in the letter, which was released by his office.

May is unlikely to welcome Labour’s offer, which highlights the fragility of her position. The premier, who lost two cabinet ministers in a week to different scandals, has received a letter from pro-Brexit rival Boris Johnson demanding a bolder approach to the divorce, the Mail on Sunday reported. And 40 Conservative lawmakers back a challenge to her leadership, The Sunday Times said, just eight short of the number that triggers a vote.

[..] May’s landmark Brexit legislation, the EU Withdrawal Bill, returns to Parliament on Tuesday, where it faces hundreds of proposed amendments to be considered over eight days of debate. Even with the backing of Northern Ireland’s Democratic Unionist Party, May only has a slim majority. Tories who want to keep close ties to the EU have put their names on many of the measures, suggesting the government will have to back down or be defeated.

They’re talking about dates and timelines to present proposals to the EU, but they’ll never agree on any. And even if they do, Brussels will be ready to tear them to pieces. It’s hard to see how a Brexit will ever happen, but it’s easy to see that if it ever does, it’ll be an absolutely fabulous mess. And then even John Cleese won’t be laughing anymore.